The Australian Treasury has initiated steps to introduce a regulatory framework targeted at cryptocurrency exchanges.
According to the consultation paper titled "Regulating digital asset platforms," which was made public on October 16th, the key objective of this new regulatory approach is to enforce existing financial service laws on crypto exchanges. The Treasury plans to abstain from drafting any new, crypto-specific regulations.
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The document stipulates that crypto exchanges holding more than $3.2 million (or AUD 5 million) in assets or $946 (or AUD 1,500) per individual are mandated to acquire a license from the Australian Securities and Investment Commission (ASIC).
The crypto community in Australia has reacted with a range of opinions regarding the newly proposed rules. Adam Percy, the general counsel at Australian crypto exchange Swyftx, lauded the effort as "thoughtful," stating:
<...> The primary focus should be to make sure cryptocurrency users can access blockchain technology with appropriate protections and that there’s room for innovation.
Conversely, Jonathon Miller, the director of Kraken Australia, voiced his dissatisfaction. He criticized the government for "shoehorning" cryptocurrency into existing financial laws. Miller argued:
Australia is now in the unfortunate situation where our regulation has taken a very long time, <...>. We’re behind our global peers when it comes to implementing a crypto framework, so I appreciate the need to have something in place locally to provide certainty to platforms like ours.
Legal experts also weighed in on the consultation paper. Liam Hennessy, a partner at international law firm Clyde & Co, pointed out that these proposed changes are not set in stone and could be subject to alteration following public consultation. He emphasized:
Whatever the Treasury suggests, it is just that — a suggestion only. The Government is not bound to follow its recommendations, and there will be lobbying once the consultation paper comes out.
Hennessy also noted that the paper didn't address several critical issues, including the challenges many licensed crypto exchanges face in obtaining adequate banking services.
As for the next steps, the Treasury has explicitly mentioned that the primary goal of the consultation paper is to gain feedback. Responses to the proposed regulations are invited until December 1st, 2023.
In other Australia-related news, the Reserve Bank of Australia and Mastercard have successfully completed their experiment linked to wrapped central bank digital currencies (CBDCs).
The Australian Treasury's move to regulate cryptocurrency exchanges rather than individual tokens is an interesting development in the crypto regulatory landscape. While supporters believe this approach could benefit consumer protection and innovation, skeptics argue that it shoehorns crypto into an outdated regulatory framework. Ultimately, the proposals remain subject to change following a public consultation period, leaving the future of crypto regulation in Australia uncertain.
