The Australian Treasury had, in a recently released consultation paper, clarified that it targets regulating crypto at the exchange level rather than focusing on individual tokens. The Treasury obligates crypto exchanges to apply for financial services permits from the local finance controller.
The release of the consultation paper coincides with the Federal government of Australia pushing plans to control the digital asset sector at the exchange level. The consultation paper released on October 16 mandates all cryptocurrency exchanges to require financial services approval from a local finance regulator.
The new consultation paper titled ‘Regulating digital asset platforms’ shows that this new regulatory structure seeks to address consumer risks while promoting innovation in the digital sector. The new regulatory structure’s primary theme is that it aims to govern cryptocurrency exchanges and service providers rather than specific tokens or cryptocurrencies.
Besides, the paper reported that crypto exchanges are subjected to provisions under already-existing financial services regulations rather than creating other crypto-specific laws. Its accomplishment would save Australia from imposing a regulatory burden on the subjects.
The suggested new regulations emphasize the need for crypto exchanges having above $32M (AUD 5M) or above $946 (AUD 1500) per person to liaise with the Australian Securities and Investment Commission (ASIC) for a permit.
Australia Consultation Paper Yields Mixed Reaction
This proposal has evoked different reactions from the nation’s crypto exchanges. For instance, Adam Percy, Swyftx’s general counsel, termed it ‘considerate’ and admitted that ‘its major focus must be ensuring blockchain technology access with suitable safeguards and room for innovation.’
Nevertheless, the recent developments upset Kraken Australia’s director, Jonathon Miller. He said this consultation paper was basically ‘embedding’ crypto in current financial services regulation.
Miller said Australia is in an unlucky situation where its regulation has taken long. As such, the strategy of embedding crypto into current financial services regulation is being implemented. Further, he said that concerning implementing a crypto structure, the nation is behind its international peers. Hence, he acknowledges the importance of having a framework to offer platform confidence. He also added that he was confident in collaborating with the government to ensure the advantages of future crypto innovations that might not be within the conventional ‘financial services’ box are not snuffed out.
Consultation Paper Labels as Mere Proposals and Lack Legal Binding
Liam Hennessy, a partner at Clyde & Co, a global law company, stated that despite the evidence about the Treasury Bill ‘contending’ with all varieties of tokens as well as service providers, it is critical to consider that all new proposals explained in the paper are just ideas. This means they are not legally binding suggestions.
Specifically, Hennessy said that the Treasury’s suggestions are just recommendations. The government is not required to embrace them following the consultation paper’s release. He admitted that intense lobbying to amend the proposals is inevitable.
Hennessy disclosed that the consultation paper fails to address the most urgent problems affecting Australia’s crypto industry, for instance, the latest debanking cases. Specifically, he said most approved domestic and international digital asset exchanges struggle to acquire satisfactory banking arrangements.
The Treasury revealed that the consultation paper aims to elicit feedback for the several proposed queries and guidelines. Additionally, it showed that all input can be provided by December 1 this year.
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