Australia Cracks Down on Crypto With New Licensing Rules

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Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), is set to expand licensing requirements for cryptocurrency firms. This initiative, set to extend beyond crypto exchanges, aims to incorporate more companies under the nation’s corporation law. This will thereby enhance regulatory oversight in the fast-evolving crypto landscape. 

The agency revealed this is an effort to enhance consumer protection and ensure the financial system’s integrity. This initiative is aligned with the token mapping framework Australia unveiled last year. 

ASIC Set to Revamp Crypto Licensing and Regulations

During the Australian Financial Review report, ASIC Commissioner Alan Kirkland revealed that the agency is gearing up to revamp its guidelines under Information Paper 225 by November. Kirkland highlights that this update is targeted to clarify the regulation of specific crypto tokens or products. He referenced the lawsuit against Kraken as a key case study illustrating the complexities involved in unclarified crypto products. 

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Furthermore, he noted that most major crypto assets will likely fall under the Corporations Act. This suggests a shift toward tighter regulation of the entire industry. This development was primarily driven by a proposal from the Australian Treasury last year to mandate crypto exchanges with a specific asset threshold to acquire an Australian Financial Services Licence. 

Meanwhile, an exposure draft of the bill was anticipated this year, but uncertainties persist about its timeline. This further cast doubt on its introduction, particularly with the upcoming federal elections.

Australia Regulators Fight Back Against Crypto Scams

Australian authorities have raised increased concerns about the risks associated with cryptocurrency, prompting a push for stronger regulatory measures. The Treasury has highlighted several failures and vulnerabilities in crypto platforms, which have raised alarms about consumer protection. 

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To address these concerns, the ASIC cracked down on the reported removal of over 7,300 fraudulent websites, with 615 specifically linked to digital assets in 2023. In July 2024, HSBC Australia had to refuse payments to crypto exchanges, citing issues regarding fraud and dishonest behaviors. The following month, ASIC reported shutting over 600 AI-driven crypto scams within the region. This extensive crackdown illustrates the regulator’s commitment to protecting consumers from deceptive practices that could lead to financial harm.

Australia Emerges as a Crypto Hub

Australia is making significant progress in the crypto sector as it positions itself as a key player in the global crypto landscape. Despite regulatory scrutiny, crypto exchanges, including Binance, Kraken, and OKX, are increasingly expanding their regional operations.

 In June, the Australian Tax Office (ATO) doubled on crypto tax collection with a data-matching program initiative. Research conducted in 2023 revealed that 31% of youngsters in Australia hold crypto. This increasing adoption, coupled with Australia’s vibrant fintech ecosystem, underscores that the country is increasingly being recognized as a burgeoning crypto hub. 

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