Federal government takes next steps in crypto regulation

The federal government has released its next steps in regulating crypto and digital assets where these platforms might need to obtain an Australian financial services licence.

In a proposal paper, the federal government recommends making crypto exchanges and digital asset platforms subject to existing Australian financial services laws.

In addition, digital asset platforms will need to meet specific obligations that consider the platforms' nature. This will include minimum standards for holding tokens, custody software, and standards when transacting in tokens.

Stephen Jones, assistant treasurer and minister for financial services said the Albanese Government is acting “methodically” to ensure that consumers are adequately protected and innovation can flourish.

“Our proposals have been designed to ensure they are consistent with other jurisdictions, adopt existing financial service laws as appropriate and create new bespoke obligations in the areas of highest risk,” he said in a statement.

Crypto leaders in Australia have reacted to the news and seem open to future regulations.

Ben Rose, general manager, Australia, New Zealand and Pacific Islands at Binance told Digital Nation, “With user protection as a core part of our mission, Binance is committed to collaboration with policymakers and regulators to develop effective and appropriate digital asset regulatory frameworks that protect users and grow the industry for the long-term.

“As Australia formulates its own digital asset services regulatory regime, we look forward to contributing to the consultation and are committed towards a stable regulatory environment that can support innovation and protect users.”

A Coinbase spokesperson told Digital Nation it is “heartened” by the Australian Treasury's proactive steps in launching a crypto licensing framework, a move that simultaneously offers protection to consumers and fosters innovation.

“At Coinbase, we built our foundation on compliance, trust, and credibility. We see progress toward regulatory clarity as a reaffirmation of our commitment to Australia and to the expansion of the global crypto ecosystem,” they said.

“As the consultative phase commences, we are poised to continue to engage constructively with both the Treasury and our industry contemporaries.”

The spokesperson added, “Recognising Australia's legacy in technological advancements, particularly in fintech and cloud domains, we are optimistic that these forward-thinking crypto regulations will sculpt a pathway for Australia to emerge as a frontrunner in the crypto and Web3 arenas."

Collapses of crypto platforms, both locally and globally, have seen Australians lose their assets or be forced to wait their turn amongst long lines of creditors.

The federal government said these proposed reforms seek to reduce the risk of these collapses by lifting the standard of the operation of platforms and increasing oversight.

Feedback on the proposal paper closes on 1 December, with further consultation next year on the draft legislation.