Australia’s Treasury Announces Crypto Regulation Framework
The Australian government has unveiled a new regulatory framework for cryptocurrency exchanges and custody services. The proposed measures aim to bring digital asset platforms under existing financial services laws while addressing the issue of debanking.
Australia’s Treasury has announced a new regulatory framework aimed at overseeing cryptocurrency exchanges and custody services, marking a significant step in the government’s approach to digital assets.
This framework, revealed on March 21, aims to integrate these platforms into existing financial services laws and tackle the challenges surrounding debanking.
Under the proposed regulations, crypto exchanges, custodial providers, and certain brokerage firms must secure an Australian Financial Services License (AFSL). They will also need to comply with regulations designed to protect customer assets and maintain minimum capital reserves.
Notably, smaller platforms and blockchain developers will be exempt from these requirements, provided they do not exceed defined size thresholds.
The framework clarifies the status of stablecoins, categorizing them as stored-value facilities under Australia’s Payments Licensing Reforms. However, certain stablecoins and wrapped tokens will not be classified as financial products, offering some leeway in regulation.
Australia’s Treasury Addressing Debanking Issues
Additionally, the government is set to collaborate with Australia’s four largest banks to better address the issue of debanking, a practice where banks may limit or deny services to crypto-related businesses. This has raised concerns within the industry, as it restricts access to necessary financial services for those involved in digital assets.
Looking ahead, a review into the development of a central bank digital currency (CBDC) is also on the agenda. Plans for an Enhanced Regulatory Sandbox in 2025 will allow businesses to trial financial innovations in a controlled setup, bypassing the need for a full license.
Moreover, the timing of this proposal is crucial, as Australia gears up for a federal election anticipated before May 17. With Prime Minister Anthony Albanese’s Labor Party facing a competitive challenge from the Coalition, led by Peter Dutton, crypto regulation has emerged as a significant topic of discussion. The opposition has voiced strong support for regulatory measures, heightening its urgency in the electoral landscape.
Industry stakeholders have generally welcomed the proposed framework but stress the need for clearer guidelines regarding capital adequacy and custody protocols. Caroline Bowler, CEO of BTC Markets, remarked that the regulations are “sensible,” but should encourage rather than hinder investment.
