Regulatory authorities in Australia are reportedly working on a new bill that would require cryptocurrency exchanges to obtain a financial services license.

This development shows that, with the increasing popularity of crypto assets and the reach of these assets to a wide range of users, financial markets regulators are seeking to impose stricter controls on this sector.

According to the news by The Australian Financial Review (AFR), these new regulations will not be specifically limited to digital currencies and will cover a wider range of crypto assets. This is seen as a reflection of the Australian Securities and Investments Commission’s (ASIC) perspective on the industry.

ASIC commissioner Alan Kirkland stated that the regulations were necessary because the Corporations Act covers major crypto assets such as Bitcoin and Ether. Kirkland stated that crypto assets are widely traded in Australia and that many crypto assets can actually be considered in the financial product category.

Alan Kirkland announced these plans at the AFR Crypto and Digital Assets Summit in Sydney on September 23. ASIC will update Fact Sheet 225 of the Corporations Act to provide greater clarity on how crypto assets should be treated.

This fact sheet will help determine the criteria for regulators to consider crypto assets as financial products. According to Kirkland, the updated Fact Sheet will enable both market firms and investors to develop a clearer understanding of how crypto assets should be classified.

ASIC’s message is clear: It is thought that a significant number of firms operating in the crypto asset sector will need a license under existing laws. Kirkland argues that many widely traded crypto assets should be considered financial products.

This means that crypto asset firms will be subject to regulatory frameworks, just like institutions that provide traditional financial services. The purpose of these regulations is explained as increasing transparency and trust in the crypto asset market, ensuring the protection of investors and preventing illegal activities.

Australia stands out as one of the countries taking a more proactive approach to global crypto regulations. While many countries struggle to regulate cryptocurrency markets, Australia is taking significant steps to integrate crypto assets into legal frameworks.

While ASIC’s moves in this area aim to create a safer market for investors, they will also enable companies operating in this sector to take more responsibility.

According to Kirkland’s statements, with these new laws coming into force, crypto asset companies will need to be subject to licensing processes. The news states that this law is expected to come into force by November 2024.

This process will require crypto asset firms to continue their activities by obtaining a financial services license and will ensure that these firms are more strictly supervised by regulatory authorities.

The expansion of licensing requirements for crypto exchanges in Australia could be a major turning point for the crypto asset industry. Such regulations are expected to have positive effects in the long term, both in terms of protecting investors and increasing transparency and trust in the sector.