Australia Mandates Crypto Firms to Get Financial Licenses

ASIC commissioner Alan Kirkland...

Australia plans to introduce new rules that will require cryptocurrency exchanges to obtain financial services licenses. This move is aimed at bringing crypto firms under the regulatory ambit of the Corporations Act.

The decision was announced by the Australian Securities and Investments Commission (ASIC) at the AFR Digital Assets Summit. Speaking at the event, ASIC commissioner Alan Kirkland stated that a significant number of major crypto assets in the country should be covered by the Corporations Act.

Kirkland also highlighted the need for clarity on how certain cryptocurrencies should be treated. To this end, ASIC will be updating the Corporations Act’s Information Sheet 225.

“ASIC expects to issue updated draft guidance in the coming months, which we will open up to feedback from the industry,” Kirkland added.

Despite expressing support for the crypto industry, ASIC is also cognizant of the risks involved.

“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,” the commissioner explained.

Kirkland pointed out that the guidelines are focused on protecting Australian consumers, especially in light of the increasing local adoption of cryptocurrencies.

“Millions of Australians now hold crypto-asset investments, and ASIC wants to make sure they have access to important consumer protections provided by the current regulatory regime,” he said.

Notably, most crypto companies in Australia do not currently hold Australian Financial Services Licenses (AFSLs). This is largely due to legal advice suggesting that their products do not fall under existing regulations. However, ASIC’s move to classify crypto tokens as rights to digital asset ownership could potentially change this dynamic.

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