Australia seeks to accelerate regulation of crypto sector
On Wednesday, Australian opposition senator Andrew Bragg introduced a new bill to the country’s parliament to implement a licensing regime for crypto exchanges.
If passed, the bill would require Australian crypto exchanges to obtain a license to operate legally, bringing them in line with other financial service providers in the country that are also subject to licensing requirements.
Bragg introduced the Digital Assets (Market Regulation) Bill 2023 as a private senator’s bill, which aims to protect consumers and encourage investment in digital assets by introducing regulatory measures.
The bill also contains provisions on the regulation of stable coins and custody obligations. While Australian ministers usually introduce new regulatory changes, the Parliamentary Education Office notes that individual MPs can also introduce private members’ or private senators’ bills.
Senator Bragg also criticized the current Labor government for failing to implement several recommendations related to crypto regulations. The Senate Select Committee of Australia introduced these regulations as a Technology and Finance Center in October 2021.
All eyes on regulation
Regulation is at the center of the crypto industry across multiple jurisdictions. Senator Bragg argued that the Australian government’s failure to ensure regulatory clarity around the industry leaves it vulnerable to industry-wide events, such as the demise of the FTX collapse. He stated:
Australia can be a hub for digital assets while protecting consumers of digital assets. But we must act now.
This proposed legislation comes amid increasing scrutiny of the crypto sector in Australia and around the world. Last year, the Australian Transaction Reports and Analysis Center (AUSTRAC) initiated legal proceedings against two global crypto exchanges, Binance and Coinbase. These two exchanges allegedly violated anti-money laundering and anti-terrorist financing laws.
The proposed framework requires businesses to meet various requirements, including keeping track of transactions and complying with know-your-customer (KYC) and anti-money laundering regulations.
Custody services for cryptocurrency and stablecoin issuers in Australia will be subject to the same rules outlined in the bill. The legislation establishes several responsibilities and conditions for exchanges, custody services and stablecoin issuers.
This includes maintaining minimum capital or reserve requirements, segregating client funds, providing reports on client holdings, conducting audits, ensuring transparency and disclosing relevant information.
If the bill is passed, Australia will join a growing number of countries that have introduced regulations for the cryptocurrency sector, including the United States, Japan and the European Union.
Classification and definition of cryptocurrencies
Australia is conducting a public consultation on the classification of crypto, digital assets, tokens, services and platforms.
This consultation document, called “token mapping”, was released in February. This article provides information on basic definitions of crypto and the industry.
Featured image from UnSplash, chart from TradingView.com
