- Australia’s government has proposed regulating the digital currency market, requiring crypto exchanges and platforms to adhere to existing financial services laws
- The proposed regulations also demand platform operators to secure an Australian financial services license, applying to those with assets exceeding $1,500 per individual or $5 million in aggregate
- The government aims to enhance consumer protection and foster innovation while gathering public feedback and planning further consultations
Australia’s government is taking steps to regulate the digital currency market by subjecting crypto exchanges and digital asset platforms to existing financial services laws. Treasurer Jim Chalmers has proposed a raft of changes that would require platform operators to obtain an Australian financial services license in order to operate in the country. These regulations would apply to platforms holding over $1,500 of an individual’s assets or an aggregate of $5 million.
Australia Wants to Protect the Little Guy
Approximately a quarter of Australians own some form of cryptocurrency, and, as in many countries, online platforms hold substantial assets without offering investor protection. The government aims to reduce the risk of platform collapses with the new legislation, protecting consumers and promoting innovation.
Chalmers emphasized the government’s commitment to consumer protection and fostering innovation, urging the public to provide feedback on the proposal paper, with consultation on draft legislation set to continue next year. His plans include the review of minimum standards for digital assets.
Reserve Bank Eyes “Tokenized Future”
Brad Jones, an assistant governor of Australia’s Reserve Bank, also recently discussed the central bank’s evolving views on a “tokenized future,” including digital currencies for Australia. The RBA is exploring digital money’s functional forms and supporting infrastructure that can benefit the Australian economy.
The bank is in the early stages of planning a project to assess tokenized asset markets in Australia. It plans to release a “stocktake” on central bank digital currency research by mid-2024 and establish a roadmap for future work.
Jones highlighted the potential for significant savings in the instant information and accountability offered by digital currencies, citing the antiquated practices still in use in the market for bank term deposits. However, challenges related to regulatory uncertainty and compliance obligations must be addressed; smart contracts on programmable ledgers require accountability in case of errors, and policymakers and industry will need to collaborate to overcome these challenges.
