Australian Regulator Expands Oversight of Crypto Industry with Upcoming Guidance

TLDR

• ASIC plans to require crypto firms to obtain financial services licenses
• New guidance will extend beyond digital currency exchanges
• ASIC considers most major crypto assets like Bitcoin and Ethereum fall under the Corporations Act
• Updated regulatory guidance expected in coming months
• Senator Andrew Bragg criticizes government for lack of progress on crypto regulation

The Australian Securities and Investments Commission (ASIC) is preparing to introduce new guidance that will require cryptocurrency firms to obtain financial services licenses.

This move, announced by ASIC commissioner Alan Kirkland at the Australian Financial Review Crypto and Digital Assets summit in Sydney, represents a significant expansion of regulatory oversight in the country’s crypto sector.

According to Kirkland, the new requirements will extend beyond those currently in place for digital currency exchanges.

The ASIC considers that major cryptocurrencies such as Bitcoin and Ethereum fall under the purview of the Corporations Act, necessitating broader regulatory coverage.

The upcoming guidance, expected to be released in the coming months, aims to provide clarity on how specific crypto tokens and related products should be treated from a regulatory standpoint. ASIC plans to update the Corporations Act’s Information Sheet 225 to reflect these changes.

Kirkland emphasized ASIC’s support for responsible innovation in the crypto industry while expressing concerns about potential consumer harm and market misconduct.

The regulator believes that implementing a licensing regime will help mitigate risks and bolster consumer confidence and market integrity.

“ASIC’s message is that a significant number of crypto-asset firms in the Australian market are likely to need a license under the current law,” Kirkland stated.

He added that the draft guidance would be open to feedback from industry participants once released.

The announcement comes amid criticism from Senator Andrew Bragg, who argues that Australia has fallen behind in crypto regulation. Bragg claims that the country has transitioned “from crypto leader to crypto laggard” over the past two and a half years.

In his address at the AFR event, Senator Bragg highlighted the government’s perceived lack of progress in establishing a comprehensive regulatory framework for cryptocurrencies.

Live Thread: My Address at the AFR Cryptocurrency Summit #afrcryptosummit @FinancialReview

— Senator Andrew Bragg (@ajamesbragg) September 23, 2024

He pointed out that a previously anticipated regulatory approach focusing on “safety and transparency” had been abandoned following the election.

Bragg expressed skepticism about the likelihood of any significant crypto regulation being implemented during the current Parliament term. He argued that the government’s inaction has stifled innovation and denied Australians the potential benefits of blockchain technology.

The senator’s concerns follow the recent recommendation by Australia’s Committee on Economics Legislation not to pass his proposed crypto regulation bill. Introduced in March 2023, the draft bill included recommendations for stablecoin regulation, exchange licensing, and custody requirements.