Aussie FPA supports ‘crypto rule book’ and regulation of stock exchanges
The Financial Planning Association of Australia (FPA) has shown its support for the idea of a “crypto rulebook” and called for regulating exchanges instead of cryptocurrencies.
In May, the Australian Law Reform Council (ALRC) proposed tackling crypto-regulation through a regulatory box-style framework that sets out a series of gradually updated compliance principles for local crypto-firms to follow.
The comments came via a submission to the Ministry of Finance from the FPA’s head of policy, strategy and innovation, Ben Marshan, who also argued that the regulation of crypto exchanges should fall under the current financial services regime and not under a new separate legal framework.
“First, it will create an alternative, duplicate regulatory regime to regulate what is at the core is the purchase and holding of a financial asset to either private or wholesale investors.”
“Second, it will require existing licensees of financial services to apply for and have their own type of license, which increases costs and regulatory duplication,” he added.
Mashan also stressed the need to roll out greater consumer protection for local Australian crypto users and stressed that regulating secondary providers (crypto exchanges, brokers, etc.) is the best way to do this.
“The regulation of a financial product or service should not depend on the technology underlying the asset,” he said, adding that “it would be virtually impossible to regulate the product because it is so decentralized that they are in all foreign jurisdictions. “
Focusing regulation on crypto service providers will remove a lot of “complexity” from the equation given the rapidly evolving nature of blockchain technology and crypto, Mashan argued, adding that the ALRC’s idea of crypto rulebook for companies to follow “makes sense.”
“It makes it a lot easier because instead of having to work your way through thousands of pages in the Corporation Act, people can go to a specific section, and it’s much more efficient.”
Ryan Parsons, co-CEO of the local crypto exchange Swyftx, spoke to the Cointelegraph, reiterated the calls from Mashan and noted that his firm wants to see “sensible measures supporting consumer protection” soon adopted, so that Australia does not risk falling behind the US and EU:
“Our preference is for cryptocurrencies to operate within the existing licensing framework for financial services, albeit in a way that takes into account the unique characteristics of digital assets.”
“We believe this is the best way to reduce complexity and costs, as well as build confidence in crypto as an asset class among Australian investors,” he added.
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Another key idea highlighted in the ALRC’s report was to introduce the Twin Peaks regulatory model, where regulation is divided between one entity tasked with overseeing the maintenance of financial system stability while the other deals with institutional market behavior and consumer protection.
The same model is used in Australia’s Financial Regulation System, with the Australian Securities and Investments Commission (ASIC) responsible for good market behavior and consumer protection, while the Australian Prudential Regulation Authority (APRA) is responsible for the stability of the financial system.
Since the Liberal Party was emphatically pulled out of government in May, the regulatory landscape for crypto in Australia has become uncertain as the Labor Party appears to have other fish to fry.
As it stands, Labor has not yet come up with any concrete initiatives, but has outlined that the introduction of greater consumer protection in crypto will be a key focus area.
