Kraken Australia director Jonathan Miller does not support the proposed rules, saying the paper was trying to fit crypto into existing financial services regulations.
The Australian Treasury has unveiled a consultation paper that details plans to regulate crypto exchanges in the country. The new regulatory framework – released on 16 October and is titled “Regulation of Digital Asset Platforms” – Cryptocurrency exchanges will be required to apply for a financial services license from the local regulator. The Treasury claims the framework aims to promote innovation in the digital asset sector while upholding consumer rights.
The regulatory framework is designed to focus regulatory efforts at the exchange level, regulating service providers such as crypto exchanges rather than individual digital assets and tokens. Under the proposed framework, crypto exchanges would be regulated under existing financial services laws, and not under specially designed crypto-focused laws. Additionally, crypto exchanges holding more than A$5 million ($3.2 million), or A$1,500 ($946) per client, will be required to obtain an Australian Financial Services License (AFSL) from the Australian Securities and Investments Commission (ASIC). ,
The consultation paper is seeking feedback on its questions and regulation proposals. The last date to submit feedback is December 1, 2023.
The paper has received a mixed response from locally operating crypto businesses, with some like Adam Percy, general counsel of crypto exchange SwiftX, supporting it. Percy described the proposal as “thoughtful” and said that “the primary focus should be on ensuring that cryptocurrency users can access blockchain technology with appropriate security and there is room for innovation”.
On the other hand, Jonathan Miller, director of Kraken Australia, does not support the proposed rules. They said This paper was trying to fit crypto into existing financial services regulations.
“Australia is in the unfortunate position now where our regulation has taken too long, so we are taking the approach of promoting crypto within existing financial services regulation,” Miller said. “We lag behind our global peers when it comes to implementing crypto frameworks, so I appreciate the need to do something locally to provide certainty to platforms like ours.”
Miller expressed interest in collaborating with the Australian government to ensure that regulation does not impact the benefits of future innovations in the crypto sector that may not conform to traditional, pre-existing financial services regulations.
Liam Hennessy, partner at Clyde & Co law firm, explained that although the Treasury is “struggling” with all the different types of assets and service providers in the industry, it is important to bear in mind that all proposals have been brought forward by consultation paper only. were proposals and, therefore, not legally binding recommendations.
“Whatever the Treasury suggests, it is just that – just a suggestion. The government is not bound to follow its recommendations, and lobbying will take place once the consultation paper comes out,” he said.
He also said the consultation paper ignores more pressing issues such as the recent rise in de-banking, noting that “many licensed digital asset exchanges, both domestic and international, are struggling to find adequate banking arrangements.” “.
Non-financial tokens such as those used in gaming and NFT Are expected To be irregular. Exchanges dealing in such tokens will still be required to hold an AFSL. The proposal also provides for setting some standards around trading, staking and fundraising for non-financial products.
Mercy Mutanya is a tech enthusiast, digital marketer, author and IT Business Management student. She enjoys reading, writing, doing crossword puzzles, and watching her favorite TV series.
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