The Senate Select Committee on Australia as a Technology and Financial Centre has called for a new market licence for digital currency exchangers so more crypto assets can be fall under ASIC’s regulatory remit.
The Senate committee tasked with reviewing fintech and regtech in Australia has handed down its final report, providing eight recommendations focused on how digital assets should be regulated. Among those recommendations within the Senate Select Committee on Financial Technology and Regulatory Technology’s final report [PDF] is a call for the federal government to create a market licence for digital currency exchangers (DCE). After reviewing submissions from industry stakeholders, the committee found the current regulation of DCEs, which is generally limited only to registration with Austrac, is inadequate for businesses that in some cases deal with asset volumes in the billions of dollars. Most crypto assets that are currently available to Australian retail investors fall outside of ASIC’s regulatory perimeter, meaning that companies currently offering these products do not need to hold an AFS licence or a market licence. As such, the committee is recommending the creation of a new category of market licence that enables DCEs to demonstrate a high level of commitment to consumer protection and operational integrity, without imposing obligations that are onerous as it would drive local operators out of the market. In making that recommendation, the committee said the new DCE Market Licence category should include, at minimum, requirements relating to capital adequacy, auditing, and responsible person tests. With most digital assets, including crypto assets, currently not meeting the legislative definitions for financial products and services, the committee has also recommended for the Treasury Department to conduct a token mapping exercise to classify the various types of crypto asset tokens and other digital assets being developed in the market.
