Australia is about to release new rules requiring crypto firms to get a financial services license under the Corporations Act. This comes as the country is trying to regulate its fast-growing crypto industry more stringently. Speaking at the AFR Digital Assets Summit on Monday, Alan Kirkland, a commissioner at the Australian Securities and Investments Commission (ASIC), revealed the upcoming regulatory changes.
Crypto Assets Classification
The commissioner pointed out that many crypto assets in Australia would be classified as financial products under existing laws which means several firms would require the appropriate license. ASIC’s regulation concentrates on “financial products” mainly related to investments, risk management, or non-cash transactions. However, Kirkland admitted that given the novelty of crypto assets, it is not always clear whether some of the digital constructs would be considered to necessitate a license.
Kirkland also revealed that ASIC intends to issue new draft guidance on these issues in the near future. The regulator will seek input on the new rules from the industry to confirm its understanding of the rules and the extent to which they are effective in regulating crypto assets.
Protecting Crypto Investors
Millions of Australians are already invested in cryptocurrencies, and ASIC wants to protect them as consumers. Kirkland stated,
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
Most crypto companies stay unlicensed and avoid getting AFSLs because their products are not regulated under current laws based on legal counsel. However, by November this year, ASIC is expected to release new guidance on categorizing crypto tokens as digital asset ownership rights.
Reducing Consumer Risks
The enhanced attention on the crypto space stems from the rising risks of consumer detriment and possible market abuse. Kirkland said the new licensing rules would improve consumer confidence and protect the market.
Australia’s Central Bank to Launch a 3-year Program on CBDCThe Australian Securities and Investments Commission has already increased the pace of its actions in the crypto market, warning investors and companies that it will closely watch the industry. In the past month, the regulator has accused Kraken of not properly disclosing margin trading risks to Australian clients, with many customers losing money.
In another major move, ASIC filed a legal complaint against ASX for allegedly mismanaging its blockchain-based CHESS replacement project in August. Once the new laws are implemented, ASIC’s growing influence is expected to reorganize the Australian cryptocurrency market.
