Australia is taking decisive steps to set up a clear control framework for the crypto sector, according to the treasury’s explanation about developing an innovative Australian digital assets industry.
The treasury said that the relocation aims to offer more consumer protection, reduce the risk and bring much needed clarity in the industry.
Legal framework
According to the proposed framework, certain crypto companies will be brought under existing financial services laws.
This includes scholarships, preservators and Stablecoin spending, all of whom have to obtain an Australian Financial Services License (AFL) to operate legally. These companies would also be subject to new rules that have been designed to display the specific nature of digital assets.
The treasury argued that these measures are essential for reducing custody, liquidity, counterparts, fraud and cyber security risks. In the meantime, companies that act in Token-based value products will meet strict requirements that are used for payments must meet strict requirements.
These include guarantees for customer assets, repayment processes and liquidity support, whereby the standards are reflected that are applied to traditional non-continuous payment systems.
Although the rules are aimed at bringing more structure for industry, not all crypto-related entities will fall under the new regime. Developers who create non-financial blockchain applications and those who build or maintain decentralized protocols remain out of reach.
Moreover, smaller startups that do not meet the proposed barriers can also be exempt, although they may still have to follow limited compliance rules.
The treasury confirmed that a draft version of the legislation will be released later this year for public consultation. Input from the Australian Securities and Investments Commission (ASIC) will help shape the final framework.
Wider reforms
In addition to licenses, the government is investigating broader crypto-related reforms. These include a new crypto asset reporting framework (carf) and measures to resolve Debanking -challenges that influence many crypto companies.
According to the authorities:
“The banking can have a devastating impact on the banking companies and individuals. It can also suppress competition and innovation in the financial services sector and have a negative influence on that of Australia
economy.”
Moreover, the supervisors are also investigating the tokenization laws and the possibility of launching a central bankdative currency (CBDC).
In the meantime, the improved regulatory sandbox (ers) will be revised in 2025. With this Sandbox, companies can test financial services and credit innovations without needing a license, so that safely experimenting within the fintech room of Australia stimulates
