Aussie crypto exchanges look to new licensing regime with cautious optimism

October 16, 2023 Coin Telegraph

Australian crypto exchanges have largely praised the Treasury’s latest proposal to place crypto exchanges under the existing financial services license regime, though some worry it could put the crypto industry into a TradFi-shaped box.

Australian crypto exchanges have praised plans from the Australian Treasury to regulate cryptocurrency exchanges under pre-existing financial services licensing measures.

In an Oct. 16 consultation paper, the Treasury outlined a new suite of proposed regulations, that suggested regulating cryptocurrency exchanges under existing financial services rules as well as introducing a wealth of new guidelines for all Australian firms dealing in digital assets.

Speaking at the Australian Financial Reviews Crypto Summit event on Oct. 16, Australian Treasury Stephen Jones said the new regime was focused on three primary areas: providing a framework for industry growth and innovation, allowing regulatory certainty to crypto service providers, and ensuring that everyday consumers and their assets remain protected.

Australian crypto exchanges will be regulated under pre-existing financial services laws, suggests the latest consultation paper from the Treasury. https://t.co/V1Dr8DeZF8
— Cointelegraph (@Cointelegraph) October 16, 2023

Caroline Bowler, the CEO of BTC Markets told Cointelegraph she was pleased to have reached a new “key milestone” in the regulatory process and regarded the rules as a positive progression for the wider crypto industry in Australia.

“It’s a great next step for the Australian economy. Digital assets are so clearly the future of financial services. It is imperative the country keeps pace with our international peers, with a robust regulatory framework,” said Bowler.

Similarly, Adrian Przelozny, the CEO of Independent Reserve commended the Federal government on its recommendations to introduce stronger regulation and policy change, telling Cointelegraph that these new proposals could help restore trust in the crypto sector.

“We firmly believe these changes will drive investment, provide certainty to the sector and ultimately, increase consumer protection.”

The general counsel of Swyftx, Adam Percy, also agreed with much of the Treasury’s proposals, saying the primary focus should be ensuring that crypto investors can safely access the benefits of blockchain technology, while still allowing room for innovation.

However, Jonathon Miller, the Managing Director of Kraken Australia, told Cointelegraph he was concerned that the new rules would be stuffing the crypto industry into a TradFi-shaped box.

“Australia is now in the unfortunate situation where our regulation has taken a very long time, so we’re taking the approach of shoehorning crypto into existing financial services regulation,” said Miller.

Still, Miller admitted that the consultation paper was a step in the right direction, especially for providing much-needed regulatory certainty for crypto companies operating on Australian soil.

“We’re behind our global peers when it comes to implementing a crypto framework, so I appreciate the need to have something in place locally to provide certainty to platforms like ours,” he added.

Liam Hennessy, a partner at Clyde & Co — an international law firm that has been assisting in the consultation process — said that the newest proposal from the Treasury “makes sense” for the Australian crypto industry.

Hennessy explained that the new rules will help the nation catch up to jurisdictions such as the European Union who are further along in their efforts to better regulate crypto.

Additionally, he said the Australian Financial Services (AFS) licensing regime can be quite complicated, meaning that local cryptocurrency exchanges and digital asset service providers will need to begin preparing their applications now.

Magazine: Are DAOs overhyped and unworkable? Lessons from the front lines

Commonwealth Bank of Australia recognizes risks in missing out on crypto

November 23, 2021 Coin Telegraph

ASIC

“We see risks in participating, but we see bigger risks in not participating,” said CBA CEO Matt Comyn on the bank’s recent crypto adoption play.

Matt Comyn, the CEO of the Commonwealth Bank of Australia (CBA), said that the bank is more concerned about the risks of missing out on crypto than those associated with its adoption.

The CBA is set to become the first of the “big four” banks in Australia to offer crypto-based services, after the company announced on Nov. 3 that it will support the trading of 10 digital assets directly via its banking app.

Speaking with Bloomberg TV on Friday, Nov. 19, Comyn was questioned on the CBA’s take on the crypto sector, with the CEO noting that:

“We see risks in participating, but we see bigger risks in not participating. It's important to say that we don’t have a view on the asset price itself, we see it as a very volatile and speculative asset, but we also don’t think that the sector and the technology is going away anytime soon.”

Comyn also suggested that there will be much more to come from the CBA’s crypto adoption play, as he highlighted that the bank sees many use cases from blockchain tech, along with strong demand from consumers.

“And so we want to understand it, we want to provide a competitive offering to customers with the right disclosure around risks. We want to build capability in and around DLT and blockchain technology,” he added.

ASIC holds no FOMO and can’t regulate the sector

While the CBA appears to be bullish on crypto and distributed ledger tech, the Australian Securities and Investments Commission (ASIC) has urged for investor caution while also noting that it is unable to oversee the sector.

Speaking at the Australian Financial Review Super & Wealth Summit on Nov. 22, ASIC chairman Joe Longo suggested that the financial enforcer cannot regulate crypto as the asset class currently does not fall under the scope of “financial products” in Australia:

“The demand-driven nature of the rush into crypto has thrown up some unique challenges. At present many crypto-assets are probably not ‘financial products’, making it difficult for financial advisers to offer counsel.”

“ASIC has already provided some guidance on exchange-traded funds linked to crypto-assets — they at least are financial products and traded on a licensed exchange, so there will be some protections there — but for the most part, for now at least, investors are on their own,” he added.

In Longo’s personal view, he urged local investors to pursue crypto with great caution, noting that “the maxim ‘don’t put all your eggs in one basket’ comes to mind.” However, he also emphasized that the crypto proposals put forward by the Australian Senate last month was the right move for the local climate.

“Wherever we land from a policy perspective, Senator Bragg’s committee was right to highlight the fact that crypto is on our doorstep, here and now, and being driven by extraordinary consumer and investor demand,” he said.

Proposed Australian exchange licensing could stifle competition: Kraken

November 23, 2021 Coin Telegraph

Adrian Przelozny

Kraken Australia’s Managing Director is concerned that a proposed new licensing regime for crypto exchanges could collapse the vibrancy of the industry down under.

With crypto regulation reportedly set to ramp up in Australia over the next 12 months, Kraken Australia’s Managing Director Jonathon Miller thinks that a strict crypto regime could stifle local competition.

The Senate Committee on Australia as a Technology and Financial Center, led by crypto-friendly Senator Andrew Bragg tabled 12 extensive recommendations for regulation of the digital asset and Fintech industry last month. The proposals included a new licensing regime for crypto exchanges, new laws to govern decentralized autonomous organizations (DAOs), and an overhaul of capital gains tax in decentralized finance (DeFi) to name a few.

In an exclusive interview with Cointelegraph, Miller said it was “yet to be seen” if the proposed regulations would have a positive or negative effect on the local sector moving forward, noting that:

“We've seen other markets where onerous regulatory regimes have come in and you know, you see a collapse of competition, a collapse of the vibrancy that we've got today in Australia.”

“And I hope that doesn't happen because that will be bad for the consumer in the long run,” he added.

Under the proposed market licenses for Australian digital currency exchanges (DCE), local firms would need to meet strict “capital adequacy, auditing, and responsible person” requirements to obtain a license to operate.

Speaking on the matter, Miller drew comparisons with Japan as he argued that the limited number of options on the market due to the government's strict licensing requirements which also negatively impact the local consumer.

“[Kraken has] a markets license in Japan, one of the very few crypto companies available to Japanese users. Even though we're active there and we're really supportive of that market, I don't think that's good for the Japanese people that there are so few opportunities for players in space,” he said.

Caroline Bowler, the CEO of local crypto exchange BTC Markets offered a different take, however, telling Cointelegraph that the incoming crypto regime in Australia will “enhance and enable innovation.”

“The proposal, I feel, had a lot of very forward-looking points of view in it. The talk about DAO’s in particular, that would be extremely innovative from a regulatory point of view for any country, any jurisdiction, anywhere in the world,” she said.

Bowler stated that the “single biggest roadblock” for the firm when exploring expansion opportunities for compliant services and products last year was the lack of crypto-focused regulation in Australia:

“That was causing issues across the business and issues for us to expand and issues for our clients and causing a hesitancy amongst people coming in. We couldn't offer the full range of what we wanted to offer.”

“And the licensing regime, as it currently existed for traditional markets, was a shoe that didn't fit. We couldn't squeeze in,” she added.

Adrian Przelozny, the CEO of Australian and Singapore-based crypto exchange Independent Reserve (IR) echoed similar sentiments to Bowler, noting that the “upside of regulation far outweighs any risks.”

IR became the first Australian crypto exchange to obtain a Major Payment Institution License in Singapore at the start of October. Przelozny suggested that the firm’s registration under the Monetary Authority of Singapore’s licensing regime has significantly improved the IR’s legitimacy in the eyes of its potential partners:

“I can tell you that being in a licensed jurisdiction is much better than being in an unlicensed jurisdiction. And this is because it really changes the conversations that we have with the partners that we get to work with.”

Przelozny highlighted that the “biggest challenge” for crypto firms in Australia is being able to secure good banking relations, with de-banking being a key issue in the local crypto climate. IR’s CEO stated that this may nolonger be an issue once local companies can acquire the appropriate licensing.

“Over in Singapore, as soon as we got the license, we found the banking conversations completely changed and now the banks are approaching us to be their customer,” he said.

Crypto regulation Australia