Australia moves to license crypto firms to bolster market security

The Australian Securities and Investments Commission (ASIC) is set to implement a licensing regime for crypto service providers in the country, the Australian Financial Review (AFR) reported on Sept. 23.

ASIC Commissioner Alan Kirkland said the new rules would require local crypto firms to obtain licenses under the Corporations Act, as some of their services are classified as financial products.

Kirkland said:

“ASIC’s message is that a significant number of crypto-asset firms in the Australian market are likely to need a licence under the current law. This is because we think many widely traded crypto assets are a financial product.”

ASIC plans to release updated regulatory guidance in two months and will seek industry feedback before the launch.

Kirkland stressed the need for regulation to protect consumers and address market misconduct. He emphasized that licensing would reduce risks and safeguard both the market and its participants. He added that the expanded regulation would ensure safer access to a broader range of digital assets.

Industry experts believe the move will ensure crypto firms meet traditional financial standards, including transparency, consumer protection, and anti-money laundering compliance.

The regulatory shift comes after a 2023 Treasury proposal that suggested mandating Australian Financial Services Licenses for crypto exchanges holding substantial assets.

Countering fraudulent activity

Meanwhile, the exponential rise in fraudulent activity and other crimes related to crypto have highlighted the need for regulating the sector to ensure investors remain protected.

During the past year, ASIC has removed over 7,300 scam websites, 615 of which are linked to crypto. Additionally, the Australian Competition and Consumer Commission recently found that more than half of crypto-related ads on Facebook were scams.

Furthermore, the Australian Federal Police also revealed that illicit actors have compromised more than 2000 Australian crypto wallets to steal millions in digital assets.

These developments reflect growing concerns about vulnerabilities in the crypto space. The new licensing regime aims to address these issues and create a safer environment for crypto investors in Australia.