Australia plans to introduce new rules requiring crypto firms to get a financial services license under the Corporations Act.
There’s been a significant increase in crypto activities in the country. And the new rules will help regulate the market.
ASIC to Require Crypto Exchanges to Obtain Financial Licenses
The Australian Securities and Investments Commission (ASIC) plans to require crypto exchanges to secure financial services licenses to operate in Australia. Speaking at the AFR Digital Assets Summit, Alan Kirkland, a commissioner at ASIC, shared details about these upcoming changes. In addition, Kirkland said ASIC believes that most major crypto assets should be covered by the Corporations Act.
“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,” Kirkland said in a statement.
AUSTRALIA MANDATES CRYPTO FIRMS TO GET FINANCIAL LICENSES
Australia is set to implement new legislation requiring cryptocurrency exchanges to obtain financial services licenses, extending regulations beyond just digital currency exchanges.
ASIC commissioner Alan Kirkland… pic.twitter.com/y6tSMzjPET
— Crypto Town Hall (@Crypto_TownHall) September 23, 2024
Kirkland also revealed that ASIC plans to provide clarity on how certain cryptocurrencies should be treated. And will update the Corporations Act’s Information Sheet 225 for this purpose. He said in a statement, “ASIC expects to issue updated draft guidance in the coming months, which we will open up to feedback from the industry.”
Kirkland noted that ASIC supports the cryptocurrency industry, but is aware of the threats and risks associated. He explained, “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.”
Protecting Users
Kirkland noted that there’s an increase in locals holding crypto. So, the focus of the guidelines is to protect these users as consumers. He said, “Millions of Australians now hold crypto-asset investments, and ASIC wants to make sure they have access to important consumer protections provided by the current regulatory regime.”
Reports claim that most crypto companies in Australia opt not to secure Australian Financial Services Licenses (AFSLs). This is largely due to legal advice that their products don’t fall under existing regulations. However, ASIC’s move to classify crypto tokens as rights to digital asset ownership could change things.
ASIC Commissioner Alan Kirkland shows the way to crypto and digital asset regulation –
“A system with limited oversight, that is opaque, unpredictable and unreliable – leading to widescale investor losses or market manipulation or abuse – will ultimately fail to thrive.” ASI… pic.twitter.com/t1YEOCQTDT— The Industry Spread (@industryspread) March 20, 2024
ASIC fights Crypto Scams
Australian regulators have become more cautious about the risks tied to crypto assets. Since July 2023, ASIC has taken down over 7,300 scam websites, 615 of which were related to cryptocurrency.
In August, the Australian Competition and Consumer Commission reported that more than 50% of crypto ads on Facebook were either scams or breached Meta’s rules. This report raised concerns about Meta’s actions in curbing these scams.
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