On October 16th, Australia unveiled a comprehensive proposal to regulate digital-asset service platforms, commonly known as crypto exchanges, as part of its ongoing efforts to bring clarity and protection to the growing crypto industry.
The Australian Treasury released a consultation paper highlighting the increasing need for regulation due to the failures and vulnerabilities in these platforms, which have adversely impacted consumers.
The proposed regulatory framework is designed to address consumer harms within the crypto ecosystem while nurturing innovation. It aims to bring these digital asset platforms under the same regulatory framework that traditional financial entities operate in.
Leveraging Traditional Financial Laws for Crypto
By leveraging the existing Australian financial services framework, the government hopes to ensure consistent oversight and safeguards for consumers.
The consultation period for this document will be open until December 1st, 2023. During this time, stakeholders and interested parties can share their views and insights on the proposed framework for regulating digital asset platforms. The document contains seven key sections that address different aspects of the framework.
These sections include licensing obligations, minimum standards for facility contracts, and more. The objectives of this framework are to ensure consumer protection, promote innovation through regulatory clarity, align Australia’s regulations with international standards when applicable, and utilize flexible and adaptable regulatory tools.
The document highlights the risks associated with digital asset platforms, particularly when intermediaries hold assets for customers. Recent platform failures have resulted in significant consumer losses, attributable to factors such as inadequate governance, subpar management practices, and conflicts of interest.
To mitigate these risks effectively while promoting innovation in the use of digital assets and distributed ledger technology, a proposed regulatory framework has been introduced.
The framework also provides key definitions and explanations for various terms used throughout the document, ensuring clarity and understanding of the regulatory proposal.
It distinguishes between different types of record systems, such as account-based and token-based systems, as well as the characteristics of digital tokens and their role within the digital asset ecosystem.
However, Australia’s proposal for regulating digital-asset service platforms reflects the government’s commitment to bringing transparency and security to the crypto industry while promoting innovation and ensuring the safety of consumers and businesses involved in this rapidly evolving space.
Related Reading | XRP Takes Center Stage As Volante Partners With Top Global Banks