**Australia Moves to Regulate Crypto Start-ups with Mandatory Financial Services Licenses**
Australia is preparing to implement new regulations that will require firms in the cryptocurrency sector to acquire financial services licenses as mandated by the Corporations Act.
During the AFR Digital Assets Summit on Monday, Alan Kirkland, commissioner of the Australian Securities and Investments Commission (ASIC), emphasized that a significant number of crypto asset firms in Australia will have to obtain licensing. He pointed out that under current legislation, many crypto assets are classified as financial products.
ASIC’s regulatory framework is centered around “financial products,” which are defined as involving financial investments, risk management, or non-cash transactions. However, certain elements of the cryptocurrency landscape do not fully conform to this existing model, leading to ambiguity regarding whether specific crypto structures necessitate licensing.
Kirkland informed Cryptonews that ASIC plans to publish new draft guidance shortly, with intentions to seek input from the industry on these updates. “Millions of Australians now hold crypto-asset investments, and ASIC aims to ensure they benefit from the essential consumer protections offered by the existing regulatory framework,” he stated.
**Crypto Developers Evade Licensing Requirements, Australia to Clarify Token Regulations Amid Regulatory Scrutiny**
Numerous crypto developers have opted not to secure Australian Financial Services Licenses (AFSLs) based on legal advice, believing that their investment products do not fall within the scope of current regulations, according to AFR. To address this situation, ASIC is set to revise its guidance by November, which will delineate the classification and handling of specific crypto tokens that represent digital ownership rights and related products.
Additionally, Kirkland expressed ASIC’s concerns regarding potential consumer harm and market misconduct. He noted that licensing will play a crucial role in mitigating risks, fostering consumer trust, and safeguarding market integrity.
**ASIC Enhances Crypto Oversight**
ASIC has ramped up its enforcement actions, indicating a stronger focus on the crypto sector. Recently, the agency asserted that Kraken failed to adequately inform its Australian clients about the risks associated with margin trading, which led to significant financial losses for users.
In August, ASIC also initiated legal proceedings against the ASX, alleging mismanagement of the blockchain-based CHESS replacement project.
Stay updated by following us on Google News.
