In response to the rapidly evolving landscape of crypto and blockchain technology, the Australian federal government has embarked on a proactive mission to establish comprehensive regulatory frameworks for the cryptocurrency sector, with a particular emphasis on cryptocurrency exchanges.
The Australian federal government is actively pursuing the implementation of regulations for the crypto sector, specifically focusing on exchanges. It is considering the possibility of mandating that cryptocurrency exchanges obtain a financial services license from the local financial authority.
The Australian Treasury department has released a document proposing an important regulatory development in the digital asset sector. This proposal seeks to enhance current legislation by introducing measures to oversee digital-asset platforms in the country.
Under the plan, digital-asset platforms with a total value exceeding A$5 million or those that hold digital assets on behalf of individuals with a total value exceeding A$1,500 will be required to obtain permission from the Australian Securities and Investments Commission (ASIC).
Government’s Response To The Growing Crypto Challenge
This is a proactive move by the government to address the challenges posed by the rapid growth of digital assets and aims to enhance consumer protection, market integrity, and accountability in the industry.
While these regulations have the potential to increase transparency and security in the digital asset ecosystem, they may also pose compliance challenges for smaller platforms and could lead to industry consolidation.
The forthcoming regulatory framework will be unveiled by Assistant Treasurer Stephen Jones during the Australian Financial Review Crypto Summit. In his address, Jones will emphasize that the primary objective of this regulation is to safeguard customers by mitigating the likelihood of fraudulent activities and the potential collapse of cryptocurrency exchanges.
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Following a significant decline in the value of digital assets amounting to $1.5 trillion in the previous year, several jurisdictions have intensified their endeavors to establish regulatory frameworks for these assets.
This downturn highlighted the presence of unsafe practices and led to the downfall of prominent trading platforms. One of the notable incidents was the financial collapse of the FTX exchange, led by Sam Bankman-Fried, who is currently facing legal proceedings in the United States for his suspected involvement in a fraudulent scheme amounting to billions of dollars.
Cryptocurrency Exchanges Back Regulatory Measures
Large domestic cryptocurrency exchanges, such as BTC Markets and Independent Reserve, express their support for regulation. The administration intends to engage in consultations through December 1 regarding its plans, and thereafter, it will publish an exposure draft of its proposed legislation in the coming year.
Exchanges will be provided with a 12-month period to undergo the necessary transition to comply with the new regulatory framework.
The decision of the government to implement regulations on exchanges aligns with the previous plans proposed by the Morrison administration. This initiative was prompted by the collaborative efforts of Liberal Senator Andrew Bragg, who co-authored a report for the Senate Select Committee.
The report put forth recommendations regarding licensing and custody regulations, which were subsequently endorsed by the Treasury. However, the finalization of this policy was postponed due to the federal election that occurred last year.
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