Australia proposes new licensing regime for crypto exchanges

To regulate the fast growing crypto market, Australia proposes a new licensing regime for exchange platforms. The government aims to release a bill which will cover licensing and custody rules for crypto asset providers by 2024. 

With this, exchanges will have 12 months to transition to the new regulatory framework once the legislation becomes law. Although it was announced in February and was expected to be released in the middle of 2023, it was delayed until October.  

The proposal's publication coincided with a speech by Australia's Assistant Treasurer and Minister for Financial Services, Stephen Jones at the Australian Financial Review Crypto Summit. In the speech, Jones highlighted the need for certainty in digital asset regulation and expressed the government's intention to catch up with the rest of the world in terms of crypto regulation.

Learn more about the licensing regime here:

What is the goal of the proposed licensing regime?

The main goal of the proposed licensing regime is to establish licensing requirements for crypto exchanges. This introduces consumer protection measures which will ensure that businesses in the crypto sphere such as Gamdom comply with regulatory requirements. 

The proposal will require any cryptocurrency exchange to obtain an Australian Financial Services license from the Australian Securities and Investments Commission (ASIC). This is under the condition that the exchange holds more than AUD 1,500 ($946) for any one client or more than AUD 5 million ($3.15 million). It is noted that this applies to both domestic and overseas-based exchanges.

The proposal also highlights the government's focus on addressing the emerging NFT marketplaces. These platforms would also fall under the licensing requirement if they hold customer assets. Addressing this issue shows the government's intent to cover a wide range of business models within the regulatory framework.

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Australia’s commitment to proper and fair regulation

To show Australia’s commitment to proper and fair regulation, the Treasury invited stakeholders and industry participants such as Bitcoin casino games players to provide feedback on the proposal. 

The consultation paper asks questions about 32 themes related to the licensing regime and seeks written submissions by December 1, 2023. Gathering input from the target market will ensure that the regulation addresses the concerns of different participants.

Roadmap for future work

In addition to the licensing regime, the Treasury and Reserve Bank of Australia have announced plans to release a joint report on central bank digital currencies (CBDCs) by mid-2024. The report will provide a stocktake on CBDC research in Australia and outline a roadmap for future work. This suggests that the Australian government is also actively exploring the potential of CBDCs and their role in the country's financial system.

While the proposed licensing regime represents a step forward in regulating the crypto industry in Australia, it is important to acknowledge the timeline involved. Based on the proposal, it could take until 2025 for an Australian digital asset platform to receive a license under the new regime. This indicates that the implementation of the proposed legislation might require some time and careful consideration.

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