Australian Corporate Regulator Developing Crypto Policies That Are ‘Outcome Based’

The Australian Securities and Investments Commission (ASIC) aims to prioritise regulatory objectives as it nears completion of developing and unveiling a series of regulatory reforms for the cryptocurrency industry.

During “The Brief – Open Forum” as part of Blockchain APAC’s Policy Week on March 20, ASIC Commissioner Alan Kirkland outlined the organisation’s strategy to foster responsible financial innovation and support industry growth.

Kirkland emphasised addressing the “regulatory trilemma” regarding financial innovations, which involves balancing consumer protection, market integrity, and the promotion of financial innovation.

The ASIC is striving to enhance confidence in crypto and decentralised financial systems through enhanced supervision and careful consideration of the trilemma elements. The commissioner noted that since 2016, the ASIC has offered informal regulatory guidance to more than 900 entities.

Discussing the forthcoming reforms, Kirkland remarked:

“In short, our desired outcome is a clear set of rules that maintain market integrity and mitigate the risks to consumers and investors – backed by mechanisms that promote compliance with these rules and enable us to enforce them effectively.”

The ASIC has also received numerous proposals regarding the tokenisation of “real world assets” (RWAs).  “Some types of tokenisation will be regulated through the current regulatory regime, while others will be regulated through the Government’s digital asset platform proposal,” Kirkland stated.

Kirkland believes that ASIC’s approach to innovation and effective regulation can mitigate associated risks and facilitate the widespread adoption of digital assets.

In October 2023, the Department of the Treasury issued a consultation paper suggesting that crypto exchanges be mandated to obtain a financial services licence from the local financial regulator.

Under the proposed regulations, any crypto exchange holding more than 5 million Australian dollars ($3.2 million) or exceeding AU$1,500 ($946) per individual would need a licence from the ASIC.

While the proposal elicited a varied response from crypto exchanges operating in Australia, the Treasury clarified that the primary purpose of the consultation paper is to “solicit feedback” on the various questions and regulations outlined within it.