Australia’s regulators are strengthening their focus on crypto asset providers
The Albanese Government is acting to ensure the regulation of crypto assets protects consumers and positions our economy to take advantage of new digital products and services.
Unsustainable business models used by some companies dealing in crypto assets have left consumers exposed.
The previous government dabbled in crypto policy but never took the time to future proof our regulatory frameworks to protect consumers and guide this new and emerging class of assets.
We are acting swiftly and methodically to ensure that consumers are adequately protected, and true innovation can flourish.
Our multi-stage approach has three elements:
- strengthening enforcement.
- bolstering consumer protection; and
- establishing a framework for reform.
Strengthening enforcement action
Australia’s regulators are strengthening their focus on crypto asset providers to make sure they meet their obligations to Australian consumers.
The Australian Securities & Investments Commission (ASIC) is increasing the size of its crypto team and is upping enforcement measures.
The regulator will take legal action where it identifies crypto offerings being marketed without the appropriate credit or financial services licence.
ASIC will pay particular attention to ensuring that risks to consumers are appropriately disclosed.
The Australian Competition and Consumer Commission (ACCC) is also stepping up efforts to prevent scams, including those involving crypto assets.
The Government’s National Anti Scams Centre, located within the ACCC, will facilitate real time data sharing and the coordinated prevention and disruption of scams.
In a report published last year, the ACCC’s Scamwatch noted that more scammers are seeking payment via crypto, with losses reported via this payment method totalling $US221 million in 2022, a 162 per cent increase from the year earlier.
Digital currency exchanges are also regulated by AUSTRAC under the Anti Money Laundering and Counter Terrorism Financing Act for the purposes of preventing and detecting money laundering and terrorism financing.
Bolstering consumer protection
The Government will reform the licensing and custody of crypto assets, particularly for the subset of crypto assts that currently fall outside the financial service’s regulatory framework.
We will establish a set of obligations and operational standards for crypto asset service providers to ensure they adequately safe keep assets for customers.
This will ensure consumers are protected from avoidable business failures or from the misuse of their assets by service providers.
Consultation on the design of a custody and licensing framework will begin in mid 2023 to allow for sufficient consultation prior to the introduction of legislation.
Establishing a framework for reform
While immediate action is being taken now to protect consumers, additional work needs to be done to understand the risks and opportunities crypto poses for the future.
This begins with Treasury’s token mapping exercise.
A consultation paper released today explores in detail which elements of the crypto ecosystem are sufficiently regulated and which require additional attention.
This will enable the Government and stakeholders to focus on regulatory gaps and ensure that emerging risks are identified and controlled.
The Albanese Government is committed to working methodically with regulators, industry, and consumer and business advocacy groups to get the policy settings right to protect consumers and support innovation in this emerging sector.