Australia’s Move Towards Establishing Clear Regulations for the Crypto Sector
Australia is making significant strides in creating a regulatory framework for the crypto sector, as outlined in the Treasury’s Statement on Developing an Innovative Australian Digital Asset Industry.
Key Highlights of the Regulatory Framework
- Certain crypto firms will be brought under existing financial services laws.
- Exchanges, custodians, and stablecoin issuers must obtain an Australian Financial Services License (AFSL) to operate legally.
- New rules will be implemented to address the specific risks associated with digital assets, including custody, liquidity, counterparty relationships, fraud, and cybersecurity.
- Firms dealing in tokenized stored-value products will be required to meet strict requirements related to customer asset safeguards, redemption processes, and liquidity support.
- Developers of non-financial blockchain applications and decentralized protocols will not be subject to the new regulations.
Upcoming Changes and Reforms
Besides licensing, the government is considering broader reforms in the crypto space, such as the introduction of a Crypto Asset Reporting Framework (CARF) and initiatives to address debanking challenges faced by many crypto businesses.
“De-banking can have a devastating impact on de-banked businesses and individuals. It can also stifle competition and innovation in the financial services sector, and negatively impact Australia’s economy.”
Regulators are also exploring tokenization laws and the potential launch of a Central Bank Digital Currency (CBDC). Additionally, the Enhanced Regulatory Sandbox (ERS) will undergo a review in 2025, allowing firms to test financial services and credit innovations without the need for a license.
