Australian regulator ASIC plans licensing requirements for crypto firms
The Australian Securities and Investments Commission (ASIC) is working to require cryptocurrency businesses to apply for licenses under the country's corporations law, according to a report published in the Australian Financial Review.
According to ASIC commissioner Alan Kirkland, the licensing requirements will go beyond exchanges of digital currencies because ASIC believes that the Corporations Act already covers the majority of significant cryptocurrency assets.
ASIC provides clarity on updated regulatory guidance
ASIC currently oversees a regulatory framework that is based on the idea of "financial products," which are characterized as a type of facility that allows an individual to make non-cash payments, manage financial risks, or make financial investments. However, some aspects of cryptocurrency do not fit neatly into the framework; therefore, it is not clear for certain structures whether licenses are required.
ASIC is working on an update to "Information Paper 225," which it plans to release by November. New regulatory guidelines are expected to be released in the next two months, the post added. This update will explain how specific products and crypto tokens should be treated.
Court rulings against crypto firms
ASIC wants to ensure that the millions of Australians who own investments in crypto assets have access to the important consumer protections offered by the current regulatory framework.
The Federal Court determined in February that Block Earner, a startup providing fixed-yield cryptocurrency products, ought to have been registered as a managed investment scheme. However, the court decided against imposing a fine, concluding that the business behaved honorably and not irresponsibly. That penalty decision is being appealed by ASIC.
ASIC is also contesting a ruling from a Federal Court in March that concluded Finder Wallet was exempt from licensing requirements and did not violate any financial services regulatory obligations.
Heightened Risks of Crypto Assets in Australia
The failures and vulnerabilities of cryptocurrency platforms have, according to the Australian Treasury at the time, "increased the need to regulate to protect consumers." Because of the risks involved with cryptocurrency assets, Australian authorities are becoming more and more cautious.
In July 2023, ASIC removed over 7,300 scam websites, 615 of which had cryptocurrency-related content, according to a statement it made last month. In Australia, scams still cost billions of dollars annually, as stated by Deputy Chair Sarah Court.
The goal of con artists preying on diligently employed Australians is to steal their hard-earned cash. They use crafty methods to steal money and private information. Every day, twenty investment scam websites are eliminated on average.
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