Australian regulator ASIC is looking to implement new crypto regulations, a move that has sparked a backlash in the industry
Australia’s financial landscape is about to undergo significant changes. The Australian Securities and Investments Commission (ASIC) recently unveiled its updated consultation paper. The agency said the new guidelines aim to clarify the regulation of digital assets and stablecoins.
By using existing financial frameworks, the goal is to bring crypto products under established rules. While the move promises clearer regulations, it has sparked criticism from many startups in the country.
ASIC’s Consultation Paper: Key Updates for Digital Assets
ASIC’s release of Consultation Paper 381 marks a key move towards incorporating digital assets into the wider financial system. The updated Information Sheet 225 (INFO 225) aims to clarify how traditional financial market rules will apply to crypto-related products.
The motive is to ensure that digital assets are treated with the same regulatory scrutiny as other financial products. This is geared to promote market integrity and consumer confidence.
ASIC Commissioner Alan Kirkland highlighted the importance of a balanced regulatory approach. He said this approach aims to encourage responsible financial innovation while ensuring consumer protection.
Notably, new rules make it compulsory for firms to obtain Australian Financial Services Licenses (AFSL) or Australian Market Licenses to continue operations.
ASIC’s New Crypto Regulation Move Sparks Debate
Although the new rule update aims to provide clearer guidelines, it has drawn skepticism from crypto experts. They questioned its practicality and impact on smaller businesses in the region. Many industry players argued that the new guidelines will favor larger, more established players, potentially driving startups out of the market.
Legal experts; Joni Pirovich and Liam Hennessy cautioned that compliance costs could be too high for smaller firms, particularly new startups in Australia. Pirovich added that launching a crypto business locally could become as costly, or even more expensive, than doing so overseas.
For businesses already established in the region, the increased costs could be a significant hurdle to maintaining operations. Despite these concerns, some experts acknowledge the benefits of clearer regulations.
Hennessy, for instance, sees the updated crypto regulation guidelines as a crucial step toward a more predictable market. In his view, regulatory clarity is essential for the long-term stability and growth of the crypto industry in Australia.
ASIC’s consultation period will continue until February 28, 2025. This is to give industry players more time to review and respond to the proposed changes. The regulator aims to finalize the updated guidelines by mid-2025. Feedback gathered during this process will play a key role in shaping the future of crypto regulation in Australia.
Despite challenges with the new rule, Australia’s crypto market remains active, driven by increasing adoption and institutional interest. In October, Monochrome Asset Management rolled out Australia’s first spot Ethereum ETF product (IETH). IETH is designed to allow investors buy and cash out of the fund with Ethereum (ETH).
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