The Australian Securities and Investments Commission (ASIC) plans 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 will require local crypto firms to obtain licenses under the Corporations Act because some of their services are classified as financial products.
Kirkland said:
“The message from ASIC is that a significant number of crypto asset companies in the Australian market are likely to require a license under the current law. This is because we believe that many widely traded crypto assets are a financial product.”
ASIC plans to release updated regulatory guidance in two months and will seek industry feedback ahead of launch.
Kirkland emphasized the need for regulation to protect consumers and address market misconduct. He emphasized that licensing would reduce risks and protect both the market and its participants. He added that the expanded regulations would ensure more secure access to a wider range of digital assets.
Industry experts believe that this move will ensure that crypto companies meet traditional financial standards, including transparency, consumer protection and anti-money laundering compliance.
The regulatory shift comes after a 2023 Treasury proposal that proposed making Australian financial services licenses mandatory for crypto exchanges that hold significant assets.
Combating fraudulent activities
Meanwhile, the exponential increase in fraudulent activity and other crimes related to crypto has highlighted the need for regulation of the sector to ensure investors remain protected.
Over the past year, ASIC has removed more than 7,300 scam websites, 615 of which are linked to crypto. Additionally, the Australian Competition and Consumer Commission recently found that more than half of crypto-related ads on Facebook were scams.
Additionally, the Australian Federal Police also revealed that illegal actors have compromised more than 2,000 Australian crypto wallets to steal millions in digital assets.
These developments reflect growing concerns about vulnerabilities in the crypto space. The new licensing regime aims to address these issues and create a safer environment for crypto investors in Australia.