The Australian Securities and Investments Commission (ASIC) is set to implement a licensing regime for crypto service providers in the country, the Australian Financial Review (AFR) reported on September 23.
ASIC Commissioner Alan Kirkland said the new rules would require local crypto businesses to obtain licences under the Corporations Act, as some of their services are classified as financial products.
Kirkland said:
“ASIC’s message is that a significant number of crypto-asset businesses in the Australian market are likely to require a licence under current law. Indeed, we believe that many widely traded crypto assets are financial products.”
ASIC plans to release updated regulatory guidance in two months and will seek industry feedback ahead of launch.
Kirkland stressed the need for regulation to protect consumers and combat market abuse. He stressed that licensing would reduce risks and protect both the market and its participants. He added that expanding regulation would ensure safer access to a wider range of digital assets.
Industry experts believe the move will ensure that cryptocurrency businesses adhere to traditional financial standards, including transparency, consumer protection and anti-money laundering compliance.
The regulatory change comes after a 2023 Treasury proposal that suggested imposing Australian financial services licenses on cryptocurrency exchanges holding substantial assets.
Combating fraudulent activities
At the same time, the exponential increase in fraudulent activities and other cryptocurrency-related crimes has highlighted the need to regulate the sector to ensure investor protection.
Over the past year, ASIC has taken down more than 7,300 fraudulent websites, 615 of which were related to cryptocurrencies. Additionally, the Australian Competition and Consumer Commission recently found that more than half of cryptocurrency-related ads on Facebook were scams.
Additionally, the Australian Federal Police also revealed that illicit actors compromised more than 2,000 Australian crypto wallets to steal millions in digital assets.
These developments reflect growing concerns about vulnerabilities in the cryptocurrency sector. The new licensing regime aims to address these issues and create a safer environment for cryptocurrency investors in Australia.
