‘It’s about restoring trust’: Australian crypto exchanges cautiously welcome new regulations proposal
At last, there’s been some decent movement regarding long-discussed, long-diverted Australian crypto regulations. And some of Australia’s leading crypto exchanges seem, on the whole, cautiously optimistic about it.
The news landed on Monday with the nation’s Treasury announcing, via a newly released proposal and consultation process, that the government plans to release draft legislation that covers licensing and custody rules for crypto asset providers by 2024.
The Australian Treasury’s proposal would require crypto exchanges to apply for a financial services licence from the Australian Securities and Investments Commission (ASIC), Australia’s financial markets conduct regulator. And it aims to address “consumer harms while supporting innovation in the uses of digital assets and emerging technologies”.
This move is seen as a step in the right direction for clarity regarding guidelines for the local industry – something most Australian crypto firms have been demanding for years.
As we all well know, however, the wheels of government can turn painfully slowly, so it could still apparently take until 2025 before any Aussie crypto exchange platform is able to attain a licence under any new regime.
One important thing to note here, this is a move to regulate exchanges, and not the crypto tokens themselves, which some feared was the way the Labor government might have been heading with its laborious Token Mapping, fact-finding audit of the industry.
Here are some nuanced takes from various local industry experts/crypto exchanges, shared with Stockhead. Starting with…
The exchange boss and founder of one of Australia’s oldest crypto platforms welcomed the Aussie government’s new proposal but warned that the recommendation “must be followed by swift action”.
“[Monday’s] recommendations are a milestone for the Australian crypto sector,” said Przelozny.
“This isn’t just about regulation; it’s about restoring trust. We firmly believe these changes will drive investment, provide certainty to the sector and ultimately, increase consumer protection.
“As more Australians invest in digital assets, it’s critical that we have a robust and competitive regulatory, tax and policy framework that deals with these assets,” he said.
“A recommendation is one thing, but what we need now is firm action to follow it through. The Albanese government has an opportunity to revolutionise the Australian crypto sector and improve consumer protection, therefore driving innovation, confidence and growth in the industry.
“While it’s promising to see action and progress in this space, we urge the government to maintain momentum with these changes and act swiftly to move to implementation.
“For too long, investors have had to weigh up accessing a rapidly growing asset class and the risk of investing in an unregulated environment, where distinguishing which companies operate in a responsible manner is difficult. Australian investors deserve better.
“We have led the way with pushing for these critical industry changes and greater protection for crypto users for many years now, so this is an important day for the sector,” added Przelozny.
The head of another of Australia’s oldest crypto exchanges, Caroline Bowler describes the new Treasury-led crypto regulations proposal as a “key milestone”, a “positive progression for the crypto industry” and “a great next step for the Australian economy”.
“Digital assets are so clearly the future of financial services,” said Bowler. “It is imperative the country keeps pace with our international peers, with a robust regulatory framework.
“BTC Markets has long agitated for appropriate, proportional regulation of the crypto industry in Australia. This includes holding an AFSL under our sister company, BTCM Payments, since 2022.
“We look forward to continuing the consultation process with government on this key legislation.
“BTC Markets has been built around traditional finance risk frameworks. We fully expect to be one of the first exchanges to qualify under the new framework.”
Kraken, a major global crypto exchange with a strong presence in Australia, is also pleased to see a new consultation process, notes managing director Miller.
However, he adds:
“Australia is now in the unfortunate situation where our regulation has taken a very long time, so we’re taking the approach of shoehorning crypto into existing financial services regulation.
“We’re behind our global peers when it comes to implementing a crypto framework, so I appreciate the need to have something in place locally to provide certainty to platforms like ours.
“Our concern is that this approach creates ample opportunities for the regulation to ignore the nuances of the technology (for example, unique services like NFTs).
“I’m hopeful that we can work collaboratively with the government to make sure we don’t snuff out the benefits of future innovations in crypto that might fall outside the conventional ‘financial services’ box.”
Finally, another of the country’s biggest exchanges, Swyftx, sent us some commentary from its general counsel, Adam Percy, who reminded us:
“Close to a quarter of Australian adults today own digital assets and adoption continues to grow,” before adding:
“The government consultation is thoughtful and we agree that the primary focus should be to make sure cryptocurrency users can access blockchain technology with appropriate protections and that there’s room for innovation.
“Swyftx would like to see a level playing field for national and overseas crypto platforms. It is important to have clear rules and guidance in areas like segregation of customer assets, custody and advice so that if you want to compete on these shores, you compete to Australian standards and local crypto users are properly protected.
“This is an important step because Australia will benefit from a secure and vibrant blockchain sector. Everyone wants to know where the next big triggers for economic productivity are going to come from, well here you have one.
“Blockchain technology and digital assets can unlock huge value to our national economy in areas like disintermediation and tokenisation.”