Australia has mandated that cryptocurrency firms operating within its borders must secure a financial service license.
According to a Financial Review report published on 23 September 2024, the Australian Securities and Investments Commission has asked the crypto industry to acquire licenses under corporations law.
There will also be an updated regulatory guidance available within the next two months.
🚨 ASIC wants crypto start-ups to hold financial services licences 🚨
The crypto industry should prepare to be licensed under corporations law, the corporate watchdog will tell sector leaders on Monday, with updated regulatory guidance set to be released within the next two… pic.twitter.com/vnt9xIXMIu
— Crypto Observer (@DJ_Bax01) September 23, 2024
New Licensing Requirement And What It Means
Commenting on the new requirement, ASIC commissioner Alan Kirkland said, “ASIC’s message is that a significant number of crypto-asset firms in the Australian market are likely to need a license under the current law. This is because we think many widely traded crypto assets are a financial product.”
Talking to Cointelegraph, Kirkland said, “ASIC believes that licensing and its subsequent protections will mitigate risk while bolstering consumer confidence and market integrity — two elements that are crucial in encouraging innovation in the financial system,” said Kirkland.
This mandate aligns crypto businesses in Australia with traditional financial institutions, subjecting them to similar regulatory scrutiny and obligations.
Furthermore, licensed crypto firms will have to comply with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws.
ASIC is working on an update to “Info 225 ASIC,” which it plans to release by November. The update will explain how specific items and tokens representing digital ownership rights should be handled.
Read more: Australian Regulator Removes 600 Crypto Scam Sites In Last Year
Australia’s Decision Reflects Global Trend Towards Regulating Crypto
The rapid expansion of the crypto sector has raised concerns about consumer protection, market stability, and the potential for illicit activities.
Hence, to address these issues, Australian regulators have decided to enforce stricter compliance measures on cryptocurrency firms.
Just last year, the ASIC published an article on 19 August 2024, showing it has facilitated the removal of over 600 crypto scams over the past 12 months. It comes as part of a wider effort to disrupt online investment scams. These types of scams saw Australians lose $1.3 billion in 2023.
Read more: Australian Regulator Removes 600 Crypto Scam Sites In Last Year – | 99Bitcoins
Australia’s decision reflects a broader global trend towards regulating cryptocurrencies.
Countries like Japan, Singapore, and Switzerland have already implemented comprehensive regulatory frameworks for digital assets.
Read more: Crypto ATMs In Australia Skyrocket – Law Enforcement Concerned With Misuse
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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