BlockBeats · 2024-09-23 · 3 min read
Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), is drafting new legislation requiring cryptocurrency exchanges to obtain a Financial Services License. This move expands regulatory oversight beyond traditional digital asset trading platforms, emphasizing stricter compliance for crypto businesses.
Key Regulatory Changes
- License Requirement: All crypto exchanges must now hold an Australian Financial Services (AFS) license.
- Legal Clarification: ASIC will update Information Sheet 225 under the Corporations Act to define how crypto tokens and related products are classified.
- Scope Extension: Regulations will cover Bitcoin and other major cryptocurrencies, aligning them with existing financial laws.
Alan Kirkland, ASIC Commissioner, announced these measures at the AFR Crypto Summit in Sydney, stating:
"The updated framework ensures clearer regulatory guidelines for crypto assets, protecting investors and maintaining market integrity."
Why This Matters
- Investor Protection: Prevents fraudulent activities by enforcing standardized operations.
- Market Stability: Brings crypto under formal financial oversight, reducing volatility risks.
- Global Alignment: Follows similar steps by the EU (MiCA) and Singapore (MAS).
FAQs
❓ How does this affect existing crypto exchanges?
Existing platforms must apply for an AFS license within a transition period (expected 12–18 months). Non-compliant exchanges face penalties or shutdowns.
❓ Does this apply to DeFi platforms?
Currently, the law targets centralized exchanges. ASIC is evaluating DeFi regulations separately.
❓ What are the license application criteria?
- Proof of financial stability.
- AML/CFT compliance (Anti-Money Laundering/Counter-Terrorism Financing).
- Transparent custody arrangements for user funds.
👉 Explore crypto regulations by country
Industry Response
While some exchanges welcome clearer rules, others criticize the compliance cost. CoinJar, an Australian exchange, tweeted:
"We support ASIC’s push for legitimacy but urge balanced policies to avoid stifling innovation."
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