16-10-2023 (SYDNEY) Australia is set to introduce draft legislation by 2024 outlining licensing and custody regulations for cryptocurrency providers. Following the legislation’s enactment, cryptocurrency exchanges will have a 12-month transition period to comply with the new regulatory framework, according to an announcement from Australia’s Treasury on Monday.
This timeline suggests that it may not be until 2025 that a digital asset platform in Australia could receive the required license under the newly proposed regime. However, these developments mark a significant stride by the Australian government towards establishing comprehensive cryptocurrency regulations.
The proposal had been anticipated since its initial announcement in February 2023 and was expected to be unveiled by mid-2023. The delayed release of the consultation paper in October is distinct from an earlier consultation paper concerning token mapping, which identifies the key activities and functions of crypto products and aligns them with existing regulatory frameworks.
The publication of the proposal coincided with a speech by Australia’s Assistant Treasurer and Minister for Financial Services, Stephen Jones, at The Australian Financial Review Crypto Summit (AFRCM). Details regarding the content of the proposal were first reported by AFR.
“Australia has been waiting for certainty over digital asset regulation so it can seek to catch up with the rest of the world,” noted Michael Bacina, a digital asset lawyer at Piper Alderman and Chair of Blockchain Australia. “The approach is consumer-protection centric, with a broad net set to capture many business models not currently regulated. NFT marketplaces holding customer assets could also require licensing.”
According to the proposal released on Monday, all cryptocurrency exchanges holding over AUD 1,500 ($946) of a single client’s assets or more than AUD 5 million ($3.15 million) in total assets will be required to obtain an Australian Financial Services license from the Australian Securities and Investments Commission. The proposal seeks input on 32 themes and invites written submissions by December 1, 2023.
“Swyftx would like to see a level playing field for national and overseas crypto platforms,” stated Adam Percy, General Counsel of Swyftx, a local cryptocurrency exchange. “The Government consultation is thoughtful… with appropriate protections and… room for innovation.”
Additionally, the Treasury and Reserve Bank of Australia intend to release a joint report in mid-2024, providing an overview of central bank digital currency (CBDC) research in Australia and outlining a roadmap for future work. This decision follows Australia’s earlier choice to delay the development of a CBDC for several years due to unresolved issues that emerged at the conclusion of a pilot project earlier this year.
