The Australian Securities and Investments Commission (ASIC) is actively working towards implementing a range of regulatory reforms for the cryptocurrency sector, with a focus on desired regulatory outcomes. ASIC Commissioner Alan Kirkland shared the commission’s strategy to promote responsible financial innovation during Blockchain APAC’s Policy Week.
Kirkland emphasized the need to address the “regulatory trilemma” associated with financial innovations, which includes consumer protection, market integrity, and encouraging financial innovation. The ASIC aims to foster trust in crypto and decentralized financial systems by improving oversight and finding a balance between these trilemma factors. Since 2016, the commission has already provided informal regulatory assistance to more than 900 entities.
In addition to these efforts, the ASIC has received numerous proposals for tokenizing financial products and real-world assets. Kirkland explained that some forms of tokenization will fall under the current regulatory regime, while others will be regulated through the government’s digital asset platform proposal.
Kirkland believes that the ASIC’s approach to innovation and effective regulation can help mitigate risks and facilitate the widespread adoption of digital assets.
In October 2023, the Department of the Treasury released a consultation paper that suggested requiring crypto exchanges to obtain a financial services license from the local financial regulator. Under the proposed rules, any crypto exchange holding more than 5 million Australian dollars ($3.2 million) or over AU$1,500 ($946) per individual would need to be licensed by the ASIC.
While the proposal received mixed reactions from crypto exchanges operating in Australia, the Treasury clarified that the purpose of the consultation paper is to gather feedback on the various questions and regulations outlined within it.