Australian regulators are reportedly drafting new legislation that will mandate cryptocurrency exchanges to obtain financial services licences, with updated regulatory guidance set to be released within the next two months.
Alan Kirkland, a commissioner at the Australian Securities and Investments Commission (ASIC), announced the regulator’s plans during the AFR Crypto and Digital Assets Summit in Sydney on September 23, 2024. He stated that these changes are essential because the regulator considers most major cryptocurrencies, including Bitcoin (BTC) and Ether (ETH), covered under the Corporations Act.
According to the Australian Financial Review (AFR), Kirkland mentioned that ASIC is updating Information Sheet 225 of the Corporations Act to provide more straightforward guidance on regulating specific crypto tokens and products before his appearance at the event.
“ASIC’s message is that a significant number of crypto asset firms in the Australian market are likely to need a licence under the current law. This is because we think many widely traded crypto assets are a financial product,”
Kirkland noted.
The report states that the updated legislation is anticipated to be introduced by November 2024, and the new licensing framework is expected to expand beyond current regulations for digital currency exchanges.
Recently, Kraken expressed concerns about regulatory uncertainty in Australia after a Federal Court ruling against its fiat margin trading product. The exchange highlighted that Australian crypto businesses and investors deal with a “confusing and uncertain regulatory landscape”. It emphasized the urgent need for regulatory clarity in the country’s cryptocurrency sector.
On the other hand, ASIC recently won a legal case against Bit Trade, Kraken’s Australian operator, for violating design and distribution obligations. The Federal Court found Bit Trade breached section s994B(2) of the Corporations Act in October 2021. ASIC Deputy Chair Sarah Court called the ruling a “significant outcome” and stressed the need for industry compliance to protect consumers.
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