The Australian Securities and Investment Commission (ASIC) has unveiled a proposal to impose strict licensing requirements on cryptocurrency companies.
This step, outlined in the consultation Paper released on December 4, 2024It aims to classify many digital assets as financial products, requiring companies dealing with them to obtain the appropriate licenses.
The proposed guidance signals a tougher stance on compliance in the cryptocurrency industry, which Kate Cooper, CEO of Standard Chartered-backed Zodia Custody, described as a “wake-up call.”
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Cryptocurrency exchanges will need more licenses
Under current Australian laws, businesses that provide financial services or deal in financial products must obtain an Australian Financial Services License (AFSL). In addition, platforms that facilitate the trading of these products may require a license from the Australian market.
The new rules will expand these requirements to include cryptocurrency exchanges and many other digital asset businesses. Industry experts have expressed concerns about the financial burden these regulations could impose, especially on small businesses.
Liam Hennessy, a partner at law firm Clyde & Co and an associate professor at the University of Sydney, warned that while larger companies may absorb the costs, smaller start-ups may struggle.
Cryptocurrency lawyer Johnny Perovich echoed this sentiment on LinkedIn, noting that the guidance could make launching a cryptocurrency business in Australia as expensive, if not more so, than doing so overseas.
“Australian innovators looking to get off the ground may now consider moving their operations overseas,” she wrote.
Insight: Crypto compliance is ‘no longer optional’ under Australia’s new draft guidelines
The proposed sweeping changes would force most cryptocurrency companies in Australia to obtain a financial licence, which some fear could push innovators overseas. pic.twitter.com/xzXRlUVCOV
– Verma (@CoinCipher3) December 4, 2024
Block Earner co-founder Charlie Carabuga, whose company was previously sued by ASIC for offering an unlicensed cryptocurrency yield product, shared his concerns about the financial requirements.
Carabuga explained that ASIC’s expectations, including holding millions of dollars in reserves, could stifle startups like his.
ASIC’s proposal includes an expanded definition of financial products to cover stablecoins, staking services, exchange tokens and wrapped tokens. However, Bitcoin, Ether, gaming-related NFTs, and com. memecoins These ratings may escape, providing some relief to the industry.
Meanwhile, ASIC has invited comments on the proposed updates, with submissions open until 28 February 2025. A final version of the guidance is expected by mid-2025.
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Australia lost $122 million to cryptocurrency scams in 12 months Months
The Australians fell victim Cryptocurrency scams totaling A$180 million ($122 million) In 12 months. According to the Australian Federal Police (AFP) report, the majority of the victims are under 50 years old.
In a report issued in August, Agence France-Presse revealed this astonishing matter 382 million Australian dollars ($269 million) was lost to various investment scams over the past year. Notably, 47% of these losses were related to cryptocurrency-related fraud.
As Australia mentioned Financial markets behavior regulator (ASIC) has Over 600 crypto scams removed Over the past 12 months. The regulator also helped eliminate 5,530 fake investment platform scams, 1,065 fraudulent hyperlinks, and 615 cryptocurrency investment scams.
In March, Australia’s Prudential Regulation Authority instructed banks to report their exposure to cryptocurrency companies and startups. This came after the collapse of Silicon Valley Bank.
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