The Australian government, led by its ruling center-left Labor Party, has introduced a new cryptocurrency regulatory framework that oversees exchanges in accordance with current financial services legislation and has vowed to address the issue of debanking.
This development arrives prior to a federal election expected to take place on or before May 17, which recent polls indicate is emerging as a tight contest between Prime Minister Anthony Albanese’s Labor Party and the opposing Coalition under Peter Dutton’s leadership.
The Treasury Department announced in a statement dated March 21 that cryptocurrency exchanges, custody solutions, and select brokerages that engage in trading or storing cryptocurrencies will be subject to the new regulations.
The new regime establishes compliance mandates akin to those required for other financial services within the nation, which include adhering to regulations that protect customer assets, securing an Australian Financial Services Licence, and fulfilling minimum capital criteria.
The Australian Treasury outlines four main priorities for its new crypto regulations. Source: Australian Department of the Treasury
In August 2022, the administration launched a series of industry consultations to formulate a crypto regulatory framework.
“Our legislative reforms will broaden existing financial services regulations to encompass key digital asset platforms, though not the entirety of the digital asset ecosystem,” the Treasury remarked in its announcement.
Smaller and emerging platforms that do not reach certain size benchmarks will be exempt, along with companies that develop blockchain technology or create digital assets that are not considered financial products.
Payment stablecoins will be categorized as a form of stored-value facility under the Government’s Payments Licensing Reforms; however, certain stablecoins and wrapped tokens will be excluded.
“Engaging in or trading these products on secondary markets will not be deemed as dealing activity, and the platforms on which they are traded will not be regarded as operating a market solely due to that trading,” the Treasury highlighted.
As part of its agenda for cryptocurrency, Albanese’s government has also committed to collaborating with Australia’s four largest banks to gain a clearer understanding of the scope and nature of de-banking.
A review of a central bank digital currency is also planned, along with an Enhanced Regulatory Sandbox in 2025, which would enable businesses to trial new financial products without requiring a license.
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Albanese’s administration plans to issue a draft of the legislation for public feedback. However, a governmental transition may be imminent with a federal election approaching, the date of which has yet to be announced.
Dutton’s center-right Coalition has previously asserted that it would prioritize cryptocurrency regulation if it emerges victorious in the election.
The most recent YouGov poll released on March 20 indicates that the Coalition and Labor are neck and neck in terms of two-party preferred voting.
The Coalition holds a leading position in topline voting intention, while Albanese remains favored as the preferred prime minister. Source: YouGov
Caroline Bowler, CEO of the local cryptocurrency exchange BTC Markets, stated in a release shared with Cointelegraph that the proposed areas of reform are rational and will help maintain Australia’s competitiveness with global counterparts.
Nonetheless, she believes there “will be additional clarification needed regarding capital adequacy and custody standards.”
“We must ensure that these requirements do not impose excessive burdens on business investments in Australia,” Bowler asserted.
Jonathon Miller, managing director of Kraken Australia, mentioned that there is an “urgent necessity for tailored crypto legislation” to resolve the existing ambiguities and uncertainties facing the country’s industry.
“We are convinced that by establishing a clear regulatory framework for cryptocurrency and alleviating issues such as debanking, the government can eliminate the obstacles hindering growth in the Australian economy,” he stated.
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