Australia Crypto Regulation Stepped Up

The Australian Government is taking steps to strengthen its cryptocurrency regulation landscape by giving the regulator's digital asset team more tools and additional staffing to police the crypto sector in Australia.

The Australian Securities & Investments Commission (ASIC) said in a statement on Friday that it had received tremendous support from the Australian Competition & Consumer Commission (ACCC) to boost its efforts in the wake of unfolding scams and a spate of demands for crypto ransoms.

Additional Australian crypto regulation efforts

According to Australian Treasurer Jim Chalmers and his Assistant Stephen Jones, the additional Australia crypto regulation would focus primarily on crypto asset providers to ensure the Australian consumer is protected from unsustainable business models that leave them exposed.

Should the regulator identify companies marketing crypto offerings without the requisite credit or financial services license, the regulator proposes legal action. Additionally, ASIC will ensure companies appropriately disclose risks to consumers, while ACCC will intensify efforts to avert scams such as those involving crypto assets.

The statement said the Government had noted that "more scammers" had infiltrated the emerging asset class, and consumers had lost more than $221 million through crypto payment systems in 2022 alone. Noting that the Government's efforts would focus on the crypto asset subsector that isn't covered adequately by the financial services regulatory framework, Chalmers added that the watchdog would establish new obligations and operational standards for crypto service providers to protect customers.

Encouraging consumer protection

Following the FTX exchange's global disintegration, regulators have intensified scrutiny on the digital asset sub-sector. Blowups have scarred scores of consumers taking advantage of new digital products and services. FTX's Sam Bankman-Fried is already facing a suite of criminal charges, including fraud in the US, following the collapse of his exchange and sister trading house, Alameda Research.

News about efforts to alter Australia crypto regulation by introducing “tighter safety nets” and amplifying the rules for the crypto market filtered out in December 2022 when the Government announced it would release a consultative paper in early 2023. According to the regulators, the report would lay the groundwork for a “new strategic plan” for payment systems and primarily work towards improving the regulation of cryptocurrency providers.

Australia will adopt a "multi-stage approach" involving three elements: strengthening enforcement, encouraging consumer protection, and creating a framework for its crypto mapping reform.

These actions aim to safeguard consumers, shield financial systems, and crack down on criminals. A consultation on the proposed custody and licensing framework will begin in "mid-2023".