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Australia's draft guidelines push crypto firms to seek licenses

Australia's draft guidelines push crypto firms to seek licenses

GrafaGrafa2024/12/04 10:00
By:Mahathir Bayena

Australia's proposed regulatory changes will require most crypto firms to obtain financial licenses, according to new guidance released by the Australian Securities and Investments Commission (ASIC) on Dec. 4.

The draft consultation paper mandates that crypto exchanges and other digital asset businesses now classify many digital assets as financial products, requiring firms to obtain licenses to operate legally.

Kate Cooper, CEO of Zodia Custody, described the changes as a "wake-up call" for the crypto industry, emphasising that compliance is now "no longer optional."

She noted that both local and international players will need to assess their custody and compliance processes carefully.

In Australia, any business providing financial services or handling financial products must possess an Australian Financial Services License (AFSL).

Under the new guidance, crypto exchanges and other businesses facilitating digital asset trading may be required to obtain one or both of these licenses.

However, some industry experts are concerned that the increased compliance costs could push startups and smaller businesses out of the country.

Liam Hennessy, a partner at Clyde and Co law firm, expressed concern that while larger companies may manage the legal and compliance costs, smaller businesses could face significant challenges.

Joni Pirovich, a crypto lawyer, pointed out that launching in Australia would be just as expensive, if not more so, than launching offshore.

Charlie Karaboga, co-founder of Block Earner, raised similar concerns about the financial burden the new regulations would impose on small businesses.

While some view the new guidance as a step toward greater clarity in the industry, others worry it could lead to fewer startups in Australia.

ASIC is currently inviting feedback on the proposed changes until February 2025 and is expected to release a final version of the guidance in mid-2025.

ASIC Commissioner Alan Kirkland emphasised that the guidelines aim to promote responsible innovation while ensuring consumer protection.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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