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Australia’s Securities and Investment Commission (ASIC) has unveiled a proposal to impose stringent licensing requirements on crypto firms.
The move, outlined in a consultation paper released on 4 December 2024, aims to classify many digital assets as financial products, mandating firms handling them to obtain appropriate licenses.
The proposed guidance signals a stricter stance on compliance within the crypto industry, described as a “wake-up call” by Kate Cooper, CEO of Standard Chartered-backed Zodia Custody.
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Crypto Exchanges Will Need More Licenses
Under current Australian laws, businesses offering financial services or dealing in financial products must secure an Australian Financial Services License (AFSL). Additionally, platforms facilitating the trading of these products may require an Australian Market License.
The new rules would extend these requirements to crypto exchanges and many other digital asset firms. Industry experts have expressed concerns about the financial burden these regulations could impose, particularly on smaller firms.
Liam Hennessy, a partner at Clyde & Co law firm and adjunct professor at the University of Sydney, warned that while larger companies might absorb the costs, smaller startups could struggle.
Joni Pirovich, a crypto lawyer, echoed this sentiment on LinkedIn, noting that the guidance could make launching a crypto business in Australia as costly, if not more, than doing so offshore.
“Australian innovators looking to launch may now consider moving their operations overseas,” she wrote.
🇦🇺 INSIGHT: Crypto compliance “no longer optional” under Australia’s new draft guidelines
Sweeping proposed changes would force most crypto firms in Australia to obtain financial licensing, which some worry could drive innovators offshore. pic.twitter.com/xzXRlUVCOV
— Verma (@CoinCipher3) December 4, 2024
Block Earner co-founder Charlie Karaboga, whose firm was previously sued by ASIC for offering an unlicensed crypto-yield product, shared his concerns about the financial requirements.
Karaboga explained that ASIC’s expectations, including holding millions of dollars in reserves, could stifle startups like his.
ASIC’s proposal includes an expanded definition of financial products to cover stablecoins, staking services, exchange tokens, and wrapped tokens. However, Bitcoin, Ether, gaming-related NFTs, and memecoins might escape these classifications, offering some relief to the industry.
Meanwhile, ASIC has invited feedback on the proposed updates, with submissions open until Feb. 28, 2025. A finalized version of the guidance is expected by mid-2025.
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Australia Lost $122M To Crypto Scams In 12 Months
Australians fell victim to crypto scams totaling 180 million Australian dollars ($122 million) in 12 months. According to the Australian Federal Police (AFP) report, the majority of victims are under the age of 50.
In an August report, the AFP revealed that a staggering $382 million AUD ($269 million) had been lost to various investment scams over the past year. Notably, 47% of these losses were linked to cryptocurrency-related fraud.
As reported, Australia’s financial markets conduct regulator (ASIC) has removed over 600 crypto scams over the past 12 months. The regulator also helped take down 5530 fake investment platform scams, 1065 phishing scam hyperlinks, and 615 crypto investment scams.
In March, Australia’s prudential regulator instructed banks to report their exposures to crypto firms and startups. This command followed the collapse of Silicon Valley Bank.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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