David Edwards
Australia’s federal government, led by Prime Minister Anthony Albanese’s center-left Labor Party, has announced a proposed regulatory framework that would bring cryptocurrency exchanges under the purview of existing financial services legislation. This initiative, timed ahead of a tightly contested national election expected by May 17, aims to formalize oversight of digital asset platforms and tackle the issue of debanking.
The Australian Treasury stated in a statement issued on March 21 that the new regulatory framework will apply to exchanges, cryptocurrency custody providers, and specific brokerage businesses. In order to comply with the same regulations as the larger financial services industry, these businesses would need to apply for an Australian Financial Services Licence, maintain capital adequacy, and put strong safeguards in place to protect client assets.
The framework is designed to be applied selectively throughout the digital asset ecosystem and was developed as a result of industry consultations that were started in August 2022. The new law will not apply to smaller platforms that fall below certain thresholds, blockchain infrastructure developers, or producers of non-financial digital assets.
The upcoming Payments Licensing Reforms will regulate payment stablecoins as stored-value facilities. Nonetheless, some stablecoins and wrapped tokens will continue to be exempt from these rules. The Treasury claims that trading these kinds of instruments on secondary markets won’t be considered a regulated market activity.
In addition to regulatory supervision, the Albanese government has pledged to work with Australia’s four biggest banks to gain a deeper understanding of the extent and effects of debanking on companies involved in cryptocurrency. 2025 will see the introduction of an Enhanced Regulatory Sandbox, which will allow fintech companies to test new financial products without having to obtain a license right away, and a review of a possible central bank digital currency (CBDC).
However, based on the results of the next federal election, the pace of these reforms may change. In the event that it takes power, the opposition Coalition, headed by Peter Dutton, has likewise promised to give cryptocurrency regulation a priority. The Coalition and Labor are at a standstill in the two-party preferred vote, according to the most recent YouGov survey, which was released on March 20. Albanese continues to lead as the preferred prime minister.
The plans have been met with cautious responses from industry players. The revisions are “sensible,” according to Caroline Bowler, CEO of BTC Markets, who also emphasized the need for clarity on capital and custody standards to prevent investment from being discouraged. Kraken Australia’s managing director, Jonathan Miller, reaffirmed the need for a clear legislative framework, emphasizing the need to eliminate regulatory ambiguity and lower obstacles to business expansion.
