Proposed ASIC guidelines require crypto firms to obtain financial licensing.
Crypto Licensing Becomes Mandatory in Australia
The Australian Securities and Investment Commission (ASIC) released draft guidelines on Dec. 4, proposing that many digital assets be classified as financial products. Under these rules, crypto firms must secure Australian Financial Services Licenses (AFSL), with trading platforms also requiring Australian Market Licenses.
Industry Reaction to New Rules
The guidelines have sparked mixed reactions within the industry. Kate Cooper, CEO of Zodia Custody, described it as a “wake-up call,” emphasizing the need for compliance. Others, like Clyde & Co’s Liam Hennessy, worry the stringent regulations could drive smaller crypto innovators offshore.
Financial Burden on Startups
Joni Pirovich, a crypto lawyer, noted that launching a crypto venture in Australia might now exceed the costs of setting up operations overseas. Startups like Block Earner fear financial strain, citing the need to hold significant reserves to meet licensing requirements.
Clarity Amid Challenges
Despite concerns, some stakeholders appreciate the clarity provided. Swyftx CEO Jason Titman views the move as unique, stating that few nations regulate crypto exchanges this way. ASIC Commissioner Alan Kirkland defended the changes, emphasizing consumer protection and market integrity.
Expanded Definition of Financial Products
ASIC’s draft guidance broadens the scope of financial products to include stablecoins, staking services, and exchange tokens, while possibly excluding assets like Bitcoin and Ether.
Next Steps for Feedback
ASIC is accepting feedback on the proposal until Feb. 28, 2025, with final guidelines expected by mid-2025.
Disclaimer:
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