- The government will regulate crypto at the exchange level only, not cryptocurrencies specifically.
- Public consultation on the government’s plans will continue until 1 December.
Australia recently introduced its plan to regulate the crypto industry in a consultation paper published on 16 October.
As per the plan, the federal government of Australia intends to regulate the crypto sector under existing financial services laws. It doesn’t see any requirement for drafting new crypto-specific rules.
The paper mentions that the government aims to regulate the sector at the exchange level only. In short, the government will regulate crypto exchanges and service providers, but not cryptocurrencies specifically.
The policy goal of the government is to address consumer harm while also fostering innovation in the crypto sector.
The proposed rules state that any crypto exchange with more than $3.2 million in assets, or more than $946 per individual, will need to obtain an Australian Financial Services License (AFSL) from the Australian Securities and Investment Commission (ASIC). The ASIC is the national corporate regulator of Australia.
Assistant Treasurer Stephen Jones is scheduled to reveal these long-anticipated restrictions at the Australian Financial Review Crypto Summit.
Strict regulations to come into place
The regulations would force crypto exchanges to adhere to strict standards. These include delivering services in a transparent and fair manner, handling conflicts of interest, releasing information, submitting financial reports, and meeting solvency and cash reserve requirements.
Asset custody rules will enhance consumer protection within the crypto sector.
The government aims to impose further obligations for crypto exchanges, such as standardizing contract forms and putting custody software and token transaction standards in place. It seems that these regulations are modeled after crypto regulations in other countries.
According to Treasury data, one in four Australians collectively is in control of billions of dollars in cryptocurrencies through different exchanges operating in the country. It is therefore critical for crypto exchanges to strengthen consumer protection.
Public consultation on the government’s plans will continue until 1 December. An exposure draft of the proposed legislation is set to be released next year. Crypto exchanges will have a transition period of 12 months to adapt to the new regulatory framework once the rules come into force.
