The Australian regulator eyes expanded scope to crypto firms licensing under corporate law.
The Australian Securities and Investments Commission (ASIC) intends to mandate the licensing scope for digital assets firms. The regulator considers expanding compulsory licensing plans beyond exchanges prudent, considering the major crypto assets are under the existing Corporations Act purview.
The ASIC endorses a regulatory update to clarify the treatment of crypto assets and affiliated products. In its Thursday report, the Australian Financial Review cites ASIC commissioner Alan Kirkland’s disclosure of plans to update Information Paper 225 before December. The update will deliver clarity on the treatment of crypto tokens.
Australian Regulator Seeks Mandatory Licensing for Crypto
Kirkland noted that ASIC proposes major crypto assets under the Corporation Act. The announcement echoes the 2023 proposal by the Australian Treasury obligating crypto exchanges to hold a threshold of assets to secure the Financial Services Licence.
ASIC plans to update the “Information Paper 225” for the scheduled November release. The framework will clarify the treatment of crypto and financial products.
The ASIC has attained limited success when penalizing crypto exchanges running without a license.
Australian-headquartered Block Earner has battled charges. The court filing shows the startup runs operations in Australia without the requisite license.
Surprisingly, the Federal Court ruled in favour of Block Earner, indicating that the crypto firm operated in the country lawfully.
ASIC also charged Finder Wallet, alleging it failed to register as a financial service provider. The court made a similar finding in the Block Earner case. The court held that Finder Wallet did not need a licence to operate.
The court ultimately ruled that the startup did not need a license ions. The ruling has seen the watchdog indicate it will appeal the court decisions.
Australia’s Evolving in Crypto Treatment
Australia portrays an evolving relationship with digital assets, just as the rest of the world.
Roy Morgan’s research in 2022 indicated that over a million Australians owned at least one crypto, among them a Bitcoin, Cardano and Ethereum.
The crypto ownership in the country has accelerated as illustrated in a 2023 study where the Australian Securities Exchange (ASX) discovered that nearly 30% of Aussie investors harbored plans to acquire digital assets to buy crypto in the next year. 15% of this population were already holding digital assets.
Despite the generally welcoming crypto space innovation, Australia strongly emphasizes on consumer protection. This realization manifested in the Finder report, where the Coinbase-led study indicated half of Australian owners appraise exchanges relative to their reputation and security.
While addressing the Digital Assets Summit on Monday, Kirkland indicated that obligating crypto businesses to seek financial services licenses would help minimize the litigation risk. The pronouncement sparked fear in the crypto industry as it affirmed the litigious approach deployed by the regulator to regulation would continue. Critics of the approach consider that it will stifle innovation, thereby driving the crypto startups offshore to friendlier jurisdictions.
The initial plan was to realise the exposure draft by year-end. The AFR report illustrates plans are uncertain if introducing such a bill this year is possible before the upcoming federal election.
The Australian Treasury decried the crypto platforms’ failure and vulnerability, necessitating regulation to safeguard the consumers.
The Australian authorities have recently urged caution, citing the risks associated with volatility in crypto assets. The ASIC had revealed in the previous month that it had taken down over 7,300 websites orchestrating scams since July last year. The year-long crackdown identified 615 websites involved in crypto scams.
An August 9 ruling by the Federal Court of Australia had the Australian Competition and Consumer Commission (ACCC)allege over half of the crypto-related advertisements running on Facebook are scams and potentially violate Meta’s policies.
The ACCC claimed that Meta had known about the crypto scams running in the ads for the past six years. Notably, the regulator submitted that Meta was aware that many of the crypto advertisements were misleading and illustrated deceptive promotional practices.
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