Australia's government, led by the center-left Labor Party, proposed a new regulatory structure for cryptocurrencies that would subject exchanges to existing financial services laws and promised to tackle the issue of banking denial.
This comes on the eve of the federal election, which is due no later than May 17. According to current polls, there is an even balance of power between the Labor Party of current Prime Minister Anthony Albanese and the opposition coalition led by Peter Dutton.
The Finance Ministry said on March 21 that cryptocurrency exchanges, custodial services and some brokerage firms that trade or store cryptocurrencies will be subject to the new laws.
The new regime imposes on cryptocurrency companies the same regulatory requirements that exist for other financial services companies in the country: protection of customer assets, mandatory Australian financial services license and compliance with minimum capital requirements.
In August 2022, the government initiated a series of industry consultations to develop a regulatory framework for cryptocurrencies.
"Our legislative reforms will extend existing financial services laws to key digital asset platforms, but not to the entire digital asset ecosystem," the finance ministry said in a statement.
Small platforms and startups below a certain size, as well as companies developing blockchain software or creating digital assets that are not classified as financial products, will be exempt from the new rules.
Payment stablecoins will be treated as a type of store of value under the government's payment licensing reforms; however, some stablecoins and "wrapped" tokens will be exempt.
"Trading these products on the secondary market will not be considered trading activity, and the platforms on which they are traded will not be considered market operators solely because of that trading activity," the Ministry of Finance said.
A Comprehensive Approach To The Crypto Industry
As part of its crypto agenda, the Albanese government has also promised to work with Australia's four largest banks to better understand the scale and nature of the banking restriction problem.
There will also be a central bank review of digital currency in 2025 and the creation of an Extended Regulatory Sandbox to allow companies to test new financial products without having to obtain a license.
The Albanese government intends to release draft legislation for public consultation. However, a change of government may be on the horizon due to the upcoming federal election, the date of which has not yet been set.
Dutton's center-right coalition has previously promised to prioritize cryptocurrency regulation if it wins the election.
The latest poll, released on March 20, shows the coalition and Labor trailing in the two parties' preferred votes.
Industry Reaction To The Proposed Regulation
Caroline Bowler, CEO of local crypto exchange BTC Markets, said in a statement reported by Cointelegraph that the areas of reform are sensible and will keep Australia competitive among global peers.
However, she believes that "further detail will be required on capital adequacy and custody requirements."
"We need to ensure that these requirements are not unduly burdensome for business investment in Australia," Bowler said.
Kraken Australia managing director Jonathon Miller said there was an "urgent need for specific cryptocurrency legislation" to address the current confusion and uncertainty in the country's industry.
"We believe that by establishing a clear regulatory framework for cryptocurrencies and mitigating issues such as bank failures, the government can remove the barriers holding back the growth of Australia's economy," he said.
