On Wednesday, Australian opposition senator Andrew Bragg introduced a new bill to the state parliament to introduce a licensing regime for crypto exchanges.
If passed, the bill would require Australian crypto exchanges to obtain a license to operate legally, in line with other financial service providers in the country that are also subject to licensing requirements.
Bragg introduced the Digital Assets (Market Regulation) Bill 2023 as a personal senator’s bill, which aims to protect consumers and encourage investment in digital assets by introducing regulatory measures.
The bill also includes provisions to regulate stablecoins and custody obligations. While Australian ministers usually introduce new regulatory changes, the Parliamentary Education Office notes that individual MPs can also introduce private members’ or private senators’ bills.
Senator Bragg also criticized the current Labor government for failing to implement a number of recommendations related to crypto regulation. The Senate Select Committee in Australia introduced the regulation as the Center for Technology and Finance in October 2021.
All Eyes On Regulation
Regulation is center stage for the crypto industry in many jurisdictions. Senator Bragg argued that the Australian government’s inability to ensure regulatory clarity around the industry leaves it vulnerable to industry-wide events, for example, the collapse of FTX. He stated:
Australia can be a hub for digital assets while protecting consumers of digital assets. But we must act now.
The proposed legislation is at the center of scrutiny of the crypto sector in Australia and around the world. Last year, the Australian Transaction Reports and Analysis Center (AUSTRAC) initiated legal proceedings against two global crypto exchanges, Binance and Coinbase. Both exchanges are suspected of violating anti-money laundering and anti-terrorism financing laws.
The proposed framework would require businesses to meet various requirements, including maintaining transaction records and complying with know-your-customer (KYC) and anti-money laundering regulations.
Cryptocurrency custody services and stablecoin issuers in Australia will be subject to the same regulations outlined in the bill. The law defines a number of 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 ownership, conducting audits, ensuring transparency, and disclosing relevant information.
If the bill is passed, Australia will join many countries that have introduced regulations for the cryptocurrency sector, including the United States, Japan, and the European Union.
Classifying and Defining Cryptocurrencies
Australia is holding a public consultation on the classification of crypto, digital assets, tokens, services, and platforms.
This consultation paper, called “token mapping,” was released in February. This paper provides information on the basic definitions of crypto and the industry.
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