Australia Tightens Crypto Oversight With New Treasury Bill

The Australian government is taking several steps to tighten oversight of its growing crypto sector with a new bill. As such, the Australian Treasury has submitted a new bill to parliament to bring cryptocurrency service providers under current financial laws. 

If the bill passes, digital asset platforms and token custody providers need to obtain an Australian Financial Services License (AFSL). No doubt, this will help align the industry with established financial regulations.

Australia’s New Law Brings Exchanges Under Finance Rules

Notably, the bill was first introduced and read on November 26, and it has already moved to its second reading. The Australian Treasury also plans to treat digital assets like other assets, such as property. This is under existing laws related to consumer protection, insolvency, crime, family issues, and taxes. 

Under the new rules, licensed platforms must operate efficiently, honestly, and fairly. They need to handle customer funds transparently and carefully. These rules aim to avoid the mismanagement and unclear practices that have led to major exchange failures worldwide.

Furthermore, the bill strengthens the rules that crypto exchanges and service providers in Australia must follow. Exchanges are required to comply with Know-Your-Customer (KYC) and Anti-Money Laundering (AML) regulations. With the addition of AFSL licensing, regulators want to create a clear and enforceable system that facilitates innovation while protecting investors.

Penalties and Limited Exemptions for Exchanges

As previously reported by TheCoinRise, the new rules would place crypto exchanges under the same regulatory framework as traditional financial service providers. Breaches of the regulations could bring significant penalties.

However, a smaller, low-risk platform may avoid these requirements. Exchanges holding less than 5,000 Australian dollars ($3,263) per customer and processing under 10 million Australian dollars ($6.5 million) annually would be exempt. This aligns with the current treatment of non-cash payment facilities.

Importantly, the law does not target cryptocurrency issuers or individuals who create or use digital assets for non-financial purposes.

Australia Risks Falling Behind Without Tokenization

According to a recent warning from the Australian Securities and Investments Commission (ASIC) head, the Australian financial markets risk losing their competitive edge. Joe Longo affirmed that the nation needs to accelerate its adoption of emerging technologies such as tokenization.

Longo urged policymakers and industry leaders to act swiftly or risk the country becoming “the land of missed opportunity.” Recall that BlackRock CEO Larry Fink has championed tokenization as a way to modernize traditional assets, including stocks, bonds, and money market funds.

To keep pace, ASIC plans to take a more active role in encouraging innovation. Longo announced that the regulator will relaunch its Innovation Hub to help fintech startups navigate complex regulatory requirements.