Australian Parliament Seeks To Accelerate Regulation Of Crypto Sector

On Wednesday, Australian opposition senator Andrew Bragg introduced a new bill to the country’s parliament to implement a licensing regime for crypto exchanges.

If passed, the bill would require Australian crypto exchanges to obtain a license to operate legally, bringing them in line with other financial service providers in the country who are also subject to licensing requirements.

Bragg introduced the Digital Assets (Market Regulation) Bill 2023 as a private senator’s bill, which aims to protect consumers and encourage investment in digital assets by introducing regulatory measures.

The bill also includes provisions for regulating stablecoins and custody obligations. While Australian ministers typically introduce new regulatory changes, the Parliamentary Education Office notes that individual members of parliament can also introduce private members’ or private senators’ bills.

Senator Bragg also criticized the current Labor government for failing to implement multiple recommendations related to crypto regulations. The Senate Select Committee in Australia introduced these regulations as a Technology and Financial Centre in October 2021.

All Eyes On Regulation

Regulation is the center stage for the crypto industry across multiple jurisdictions. Senator Bragg argued that the Australian government’s inability to ensure regulatory clarity surrounding the industry makes it vulnerable to industry-wide events, for instance, the downfall of the FTX collapse. He stated:

Australia can be a digital asset hub while protecting digital asset consumers. But we must act now.

This proposed legislation comes amid rising scrutiny of the crypto sector in Australia and worldwide. Last year, the Australian Transaction Reports and Analysis Centre (AUSTRAC) initiated legal proceedings against two global crypto exchanges, Binance and Coinbase. These two exchanges allegedly breached anti-money laundering and counter-terrorism financing laws.

The proposed framework requires businesses to meet various requirements, including maintaining records of transactions and complying with know-your-customer (KYC) and anti-money laundering regulations.

Cryptocurrency custody services and stablecoin issuers in Australia would be subject to the same regulations outlined in the bill. The legislation establishes several responsibilities and conditions for exchanges, custody services, and stablecoin issuers.

This includes maintaining minimum capital or reserve requirements, separating customer funds, providing reports on customer holdings, conducting audits, ensuring transparency, and disclosing relevant information.

If the bill is passed, Australia will join a growing number of countries that have introduced regulations for the cryptocurrency sector, including the United States, Japan, and the European Union.

Classifying And Defining Cryptocurrencies

Australia is conducting a public consultation regarding classifying crypto, digital assets, tokens, services, and platforms.

This consultation paper, called “token mapping,” was released in February. This paper provides information regarding fundamental definitions of crypto and the industry.