Australian regulator to insist crypto firms obtain financial services licenses

Australia’s financial regulator is outlining fresh plans to require cryptocurrency firms to be licensed under the country’s corporate law.

This goes beyond the need for crypto exchanges solely to be licensed, in an extension of the existing framework.

As reported by the Australian Financial Review (AFR), the new guidelines are desired as the regulator takes the position that the Corporations Act captures most crypto assets such as Bitcoin and Ethereum.

Australian Securities and Investments Commission (ASIC) commissioner Alan Kirkland set out the plans on Monday at the AFR Crypto Crypto and Digital Assets summit in Sydney. 

An update to ‘Information Paper 225’ of the Corporations Act will be issued by November, to address how particular crypto tokens and related commodities should be regulated.

The draft guidance will be opened to the industry for feedback and consultation.

“ASIC’s message is that a significant number of crypto-asset firms in the Australian market are likely to need a license under the current law,” Commissioner Kirkland told the AFR.

He added, “ASIC believes that licensing and its subsequent protections will mitigate risk while bolstering consumer confidence and market integrity – two elements that are crucial in encouraging innovation in the financial system.”

Australian authorities are increasingly cautious of the prevalent risks associated with crypto assets.

Last month, ASIC announced the takedown of more than 7,300 scam websites since July 2023, with 615 of those related to cryptocurrency. 

In an address to the AFR event in Sydney, Liberal Senator Andrew Bragg blasted regulators for not maintaining progress as a bellwether for the evolving sector. 

He stated Australia “has gone from crypto leader to crypto laggard” over the last two and half years.

Bragg criticized the ruling Labor government for not taking a proactive approach, predicting Australia is unlikely to accelerate any crypto regulation in the current parliament term.

"In the space of just two and half years, Australia has gone from crypto leader to crypto laggard."

— Senator Andrew Bragg (@ajamesbragg) September 23, 2024

Image credit: Via Ideogram

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