Australia is taking a major step toward regulating its cryptocurrency market, with the Australian Securities and Investments Commission (ASIC) preparing to introduce a licensing system for crypto service providers.
This is aimed at enhancing market security and protecting investors, as reported by the Australian Financial Review on September 23, 2024.
ASIC Commissioner Alan Kirkland revealed that under the new rules, many crypto firms operating in Australia will need to obtain licenses under the Corporations Act, as their services are increasingly viewed as financial products.
“A significant number of crypto-asset firms in the Australian market are likely to need a license under the current law,” Kirkland noted, emphasizing that stricter oversight is necessary to manage risks and prevent misconduct in the fast-growing sector.
The new licensing regime, set to roll out in the coming months, will require firms to adhere to traditional financial standards, including transparency, consumer protection, and anti-money laundering compliance.
This marks a shift in how crypto businesses are regulated in the country, aligning them more closely with the broader financial industry.
The decision comes on the heels of a 2023 Treasury proposal recommending that crypto exchanges holding large assets be required to obtain Australian Financial Services Licenses.
Industry experts believe the upcoming regulations will not only curb illegal activity but also provide a safer environment for both businesses and consumers to engage with digital assets.
One of the key motivations behind the licensing push is the rapid rise in crypto-related fraud and scams. Over the past year, ASIC has taken down more than 7,300 scam websites, 615 of which were linked to cryptocurrency.
In addition, the Australian Federal Police reported that over 2,000 Australian crypto wallets had been compromised, leading to millions in stolen digital assets.
Facebook has also been a hotspot for fraudulent crypto ads, with a recent report from the Australian Competition and Consumer Commission showing that more than half of the crypto-related ads on the platform were scams. These issues show the vulnerabilities in the cryptocurrency space, which the new licensing regime aims to address.
In two months, ASIC plans to release updated regulatory guidance, inviting feedback from industry stakeholders before the licensing regime is officially implemented.
While the transition may present challenges for some crypto firms, many see the move as a necessary step to ensure long-term stability and trust in the digital asset market.
