Australian Regulators Set to Enforce Financial Services Licensing for Crypto Firms

Australian regulators are preparing to implement new rules requiring cryptocurrency exchanges to obtain financial services licenses. A recent report indicates that these regulations are designed to enhance oversight of the rapidly growing digital asset market.

ASIC Highlights Regulatory Concerns

The Australian Securities and Investments Commission (ASIC) has raised concerns that the current regulatory framework is not sufficient to address the complexities surrounding popular cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). 

Commissioner Alan Kirkland shared these views during the AFR Crypto and Digital Assets Summit in Sydney on September 23, 2024. Kirkland explained that many frequently traded crypto assets already qualify as financial products under existing law, specifically the Corporations Act. 

As part of the upcoming regulations, cryptocurrency exchanges in Australia will be required to secure financial services licenses to continue their operations, according to a report by the Australian Financial Review (AFR).

Kirkland stressed that these new measures are intended to bring crypto exchanges in line with the standards applied to traditional financial institutions. Since many crypto assets are classified as financial products, exchanges must follow the same licensing requirements as other financial firms.

The move reflects ASIC’s commitment to ensuring transparency, consumer protection, and anti-money laundering compliance within the crypto sector.

Australian Regulators Face Criticism

The regulator is expected to issue updated guidelines by November 2024, outlining how specific crypto tokens and products will be treated under the Corporations Act. These changes should offer greater regulatory clarity to industry players.

Meanwhile, in his speech at the AFR Cryptocurrency Summit, Senator Andrew Bragg criticized Australian regulators for not taking a more proactive stance on regulating the crypto industry. In a recent post on X, Bragg argued that Australia has shifted from being a leader to falling behind in crypto regulation over the past two and a half years.

Bragg also predicted that significant crypto regulations are unlikely to advance during the current parliamentary term. He accused the Labor government of prioritizing their interests over fostering innovation in the crypto space.

“Labor has wasted three years by solely focusing on the needs of their close vested interests,” he said.

"The bottom line is we need to find creative ways to reduce housing costs. By locking Australia in the crypto slow lane, Labor has stifled innovation and denied Australians the opportunities to reap the benefits that blockchain provides." – End Speech.

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

Bragg noted that Labor has limited Australia’s ability to benefit from blockchain technology’s potential by hindering progress in the sector.