- Australia proposes licensing and custody rules for crypto exchanges by 2025.
- Crypto platforms holding over AUD 1,500 will require an Australian financial services license.
Australia’s Treasury made a big announcement on Monday, revealing its plan to introduce new legislation for licensing and custody rules governing crypto asset providers. In this news article, we will break down the key points of this proposal and its potential implications for the cryptocurrency industry.
The Timeline for Change
The Australian government has set a timeline for this groundbreaking development. They expect to release the draft legislation, which outlines the licensing and custody regulations for crypto exchanges, by 2024. Once this legislation becomes law, crypto exchanges will have a 12-month transition period to adhere to the new regulations.
It’s worth noting that this timeline suggests that it might take until 2025 for an Australian digital asset platform to obtain the necessary license under the freshly proposed regime. However, these steps represent a significant stride taken by the Australian government towards creating a comprehensive crypto regulation policy.
An Expected Announcement?
The crypto community has been anticipating this proposal since it was first announced in February 2023. However, the official proposal was somewhat delayed, with the release of a consultation paper in October. This consultation paper, distinct from an earlier token mapping consultation paper, addresses the process of identifying key activities and functions of crypto products and mapping them against existing regulatory frameworks.
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Insights from the Australian Financial Review Crypto Summit
The proposal was unveiled on the same day as a speech by Australia’s Assistant Treasurer and Minister for Financial Services, Stephen Jones, at The Australian Financial Review Crypto Summit (AFRCM). Jones provided details of what the proposal would entail during his speech.
Michael Bacina, a digital asset lawyer at Piper Alderman and Chair of Blockchain Australia, expressed the significance of this development. He stated, “Australia has been waiting for certainty over digital asset regulation so it can seek to catch up with the rest of the world.” Bacina emphasized that the approach is consumer-protection centric, with broad coverage to encompass many business models that are not currently regulated. He also noted that NFT marketplaces holding customer assets could also require licensing.
Key Requirements of the Proposal
The proposal introduced on Monday outlines specific requirements for crypto exchanges. According to the proposal, all crypto exchanges that hold more than AUD 1,500 ($946) for any one client or more than AUD 5 million ($3.15 million) in total assets will be required to obtain an Australian Financial Services license. This license will be granted by the Australian Securities and Investments Commission (ASIC).
Seeking Stakeholder Input
The proposal doesn’t come without room for discussion. It poses questions about 32 different themes and is open to written submissions until December 1, 2023. This approach reflects the government’s commitment to gather input from stakeholders and industry experts.
Voices from the Industry
Adam Percy, General Counsel of Swyftx, a local crypto exchange, expressed his views on the government’s consultation process. He said, “Swyftx would like to see a level playing field for national and overseas crypto platforms. The government consultation is thoughtful, with appropriate protections and room for innovation.”
Central Bank Digital Currency (CBDC) Research
In addition to the new crypto regulation proposal, the Treasury and the Reserve Bank of Australia have plans to publish a joint report around the middle of 2024. This report will provide a comprehensive overview of central bank digital currency (CBDC) research in Australia and lay out a roadmap for future work in this area. Dr. Brad Jones, Assistant Governor (Financial System) at the Reserve Bank of Australia, shared this information in a speech.
Australia’s Approach to CBDC
Earlier this year, Australia made the decision to postpone any decision regarding a CBDC for several years. This decision was driven by unresolved issues that arose at the end of a pilot project. It reflects the cautious approach the government is taking in exploring the potential of central bank digital currencies.
Australia is taking significant steps to regulate the crypto industry, emphasizing consumer protection and innovation. The proposed licensing and custody rules for crypto exchanges are expected to be in place by 2025. Stakeholder input is crucial, and the government is actively seeking feedback to shape these regulations effectively.
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