Recently, the Australian government announced its intention to control the market for digital assets by requiring cryptocurrency exchanges to obtain a financial services license from the regional authority. The action aims to safeguard consumers and promote innovation in the cryptocurrency sector. But some exchanges have expressed their reservations about the concept.Â
New Consultation Paper ReleasedÂ
On October 16, the Australian Treasury made a consultation paper titled “ReÂgulating digital asset platforms” available for download. In order to address consumer damages and systemic risks related to the digital asset industry while promoting its growth and development, the paper explains the proposed regulatory framework for cryptocurrency exchanges and service providers.Â
The paper suggests regulating cryptocurrency exchanges under the current financial services framework rather than by creating unique regulations for digital currencies. The Australian Securities and Investment Commission (ASIC) would be needed to provide cryptocurrency exchanges a financial services license, and they would be subject to the same regulations as other financial service providers. Â
Focus on Regulations over Specific Cryptocurrencies or Tokens
According to the paper, restrictions would mostly target cryptocurrency exchanges and service providers rather than specific cryptocurrencies or tokens. It acknowledges the existence of a variety of crypto assets, such as stablecoins, utility tokens, security tokens, and payment tokens. Â
The study notes that some of these assets could not now fit the Corporations Act’s definition of financial products. The report advises completing a token mapping exercise by the end of 2023 to allay this worry. Different types of cryptocurrency assets would be categorized in this exercise to see if they should be regulated as financial products. Â
Conflicting Responses from Crypto ExchangesÂ
Responses to the consultation paper on cryptocurrency exchanges running in Australia have been mixed. Others view the plan as a regressive and constrictive strategy that may limit innovation and competition, while some see it as a significant step toward bringing clarity and certainty to the crypto market.Â
Kraken Australia Director Criticizes Proposed Cryptocurrency Regulations as Outdated and Insufficient
The director of Kraken Australia, Jonathon Miller, voiced dissatisfaction with the suggestion. He called it “shoehorning” cryptocurrency into the framework of current financial services regulation. He claims that Australia trails other nations in the implementation of a thorough crypto framework. Miller wants to work with the government to make sure that regulatory measures do not ignore upcoming developments in cryptocurrency.Â
I’m optimistic that we can work together with the government to prevent suffocating the advantages of upcoming developments in cryptography that might not fit neatly into the category of traditional “financial services,” said Miller. Â
Leaving room for innovation
Additionally, the general counsel of Australian cryptocurrency exchange Swyftx, Adam PeÂrcy, stated his support for the concept and thought it was reasonable. He emphasized the need to protect consumers of cryptocurrencies while enabling access to blockchain technology and leaving room for innovation.Â
Disclaimer
Remember, investing in cryptocurrencies involves risks, and it’s important to conduct thorough research and seek professional advice before making any financial decisions.
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(Please keep in mind that this post is solely for informative purposes and should not be construed as financial or investment advice.)
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