- Australia’s new crypto rules will require firms to obtain financial services licenses under the Corporations Act.
- ASIC plans to issue draft guidance to clarify digital asset classifications under current laws.
- Growing concerns over crypto market risks prompt ASIC to enhance consumer protections.
Australia is gearing up for the release of new rules that will force crypto companies to get their financial services licenses under the Corporations Act. The decision is taken as part of the government’s efforts to regulate the rapidly expanding cryptocurrency sector more closely. Alan Kirkland, a commissioner at the Australian Securities and Investments Commission (ASIC) revealed this during Monday’s AFR Digital Assets Summit.
Kirkland revealed that many of the Australian crypto assets would be considered as financial products in the near future under the present laws. This implies that several crypto firms in the country will have to find the right license to operate. The regulatory areas of focus for ASIC primarily include investment, risk management and non-cash transactions products. However, Kirkland pointed out that a number of the digital assets have unique structures that are not easily definable under current classifications.
Guidance to Regulate Crypto Space
To this effect, Kirkland said that the regulator would release new draft guidance on the issues in the next few months. The regulator is expected to engage the industry to understand and implement the new rules in order to effectively govern the crypto space. These changes are intended to enhance legal certainty and eliminate potential loopholes through which the cryptocurrency companies might have been operating outside the law.
As of now, many Australians have invested their money in cryptocurrencies, and ASIC will ensure everyone’s investment is safe. Kirkland added that as a large share of the population owns digital assets, it is important that these investors are afforded the same consumer protections as apply to other financial instruments. It is important to protect the consumer as there are increasing reports of market manipulation and investor losses within the digital assets space.
This has happened because many crypto companies have not applied for an Australian Financial Services License (AFSL) since their offerings are not classified as financial products to date. However, by November, ASIC is expected to provide fresh guidelines on how ownership rights of digital assets like tokens will be classified, which will likely mean more firms will have to obtain licences.
The Australian Securities and Investments Commission (ASIC) also seems to be increasing the pace of its actions in the market. The regulator accused Kraken of not properly warning the Australian customers about the risks of margin trading that caused the losses. In another significant development, ASIC has lodged a legal complaint with ASX for negligence in managing the CHESS replacement project based on the blockchain technology. These actions demonstrate that ASIC is gradually becoming more involved in the digital asset market and the regulation is also expected to increase after the new laws come into force.
