- The ASIC is introducing a solid crypto licensing framework requiring many crypto firms to obtain licenses.
- Under the country’s current regulations, crypto assets are considered financial products.
- The existing laws are inadequate to accommodate cryptocurrency’s distinct characteristics.
The Australian Securities and Investments Commission (ASIC) rolls out new rules for crypto licensing under the Corporations Act.
During the AFR Digital Assets Summit on Monday, ASIC commissioner Alan Kirkland pointed out that many cryptocurrencies are currently classified as financial products, requiring several crypto firms to obtain licenses.
The ASIC’s regulatory changes highlight the shortcomings of current policies that primarily focus on financial products. These policies cover financial investments, risk management, and non-cash transactions. However, the framework struggles to adapt to the unique nature of cryptocurrency, creating uncertainty around licensing requirements for specific crypto arrangements.
Speaking about the country’s efforts to safeguard investors, Kirkland stated that the ASIC’s new policies would help mitigate risks associated with crypto. He also shared the commission’s concerns about potential market dangers, promising to build consumer trust and strengthen market integrity with the licensing rule.
Clarifying Crypto Asset Classification
According to the ASIC’s notice, many crypto developers in the country have yet to secure Australian Financial Service Licenses (AFSLs) due to confusion in the current laws. Therefore, the commission has decided to update the statutes by November 2024, clarifying the classification and treatment of various crypto assets.
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Australia has already started to take a closer look at the crypto space, intensifying enforcement actions. Regulators have made it mandatory for crypto firms to get licensed before offering services to their clients. A recent example of Australia’s renewed crypto regulation is the investigation into BitTrade, the local operator of the crypto exchange Kraken.
The ASIC alleges that Kraken failed to adequately educate its Australian clients about the risks of margin trading, resulting in significant financial losses. Moreover, the agency claims that BitTrade violated regulatory requirements by offering margin products without proper licensing.
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