TLDR
- Australia plans to integrate digital assets into its economy through a comprehensive regulatory framework
- The government will regulate crypto exchanges (Digital Asset Platforms) under financial services laws with licensing requirements
- Tokenization trials and possibly a wholesale CBDC will be explored, though retail CBDC is ruled out for now
- Draft legislation will be released in 2025 for public consultation
- The government promises to address de-banking concerns by working with Australia’s four largest banks
Australia has announced a broad new approach to regulate and integrate digital assets into its economy. The plan, released by the Australian Treasury in a white paper, draws inspiration from regulatory frameworks in the European Union and Singapore.
The Australian government wants to make digital assets part of the regular economy. They are looking at many types of digital assets. This includes tokens, real-world assets, and special digital currencies that central banks might issue.
The plan outlines how different government agencies will handle various aspects of digital assets. The Australian Treasury, the Australian Securities and Investment Commission, and the Reserve Bank of Australia will work together on this project. They plan to test using tokenized money, including stablecoins, for settling transactions.
According to the white paper, tokenized assets may offer several benefits. These markets could increase automation and reduce settlement risk. They might also lessen the need for multiple financial middlemen and simplify trading processes.
The government believes these changes could cut transaction costs. They may also provide wider access to assets that are usually hard to buy and sell. This could make investing easier for more people.
A key part of the plan is a new licensing structure for crypto exchanges. In Australia, these will be known as Digital Asset Platforms (DAPs). Operators must meet financial service rules such as having enough capital and properly disclosing information.
DAPs will also need to use outside companies to store customer assets. This adds a layer of security for investors. It helps protect their digital assets from potential problems with the exchange itself.
The government wants to help banks better manage risks when working with crypto firms
The government is also planning to address the issue of de-banking. This happens when banks refuse to serve crypto companies. Through its DAP licensing system, the government hopes to help banks better manage risks when working with crypto firms.
This effort mirrors actions in the United States. Senator Tim Scott has proposed the FIRM Act there. This act aims to stop regulators from blocking crypto firms from using banking services based on “reputational risk.”
Small exchanges and startups will get some breaks. Those that don’t meet certain size requirements won’t have to follow all the rules. The same goes for companies that develop blockchain software or create digital assets that aren’t financial products.
Payment stablecoins will be treated as stored-value facilities under the Government’s Payment Licensing Reforms. However, some stablecoins and wrapped tokens will be exempt from certain rules. Trading these products won’t be treated as a dealing activity.
The Albanese government plans to release draft legislation in 2025. This will be open for public feedback. The timing is worth noting as Australia faces a federal election by May 17, 2025.
Current polls show a close race between Prime Minister Anthony Albanese’s Labor Party and the opposing Coalition led by Peter Dutton. The Coalition has also promised to prioritize crypto regulation if it wins the election.
Industry leaders have responded positively to the announcement. Caroline Bowler, CEO of local crypto exchange BTC Markets, called the reforms sensible. She said they would keep Australia competitive with global peers.
However, Bowler noted that more details are needed on capital and custody requirements. She expressed concern that overly strict rules might discourage business investment in Australia.
Jonathon Miller, Kraken Australia’s managing director, emphasized the urgent need for clear crypto laws. He believes that establishing a regulatory framework and solving de-banking problems would remove barriers to growth in the Australian economy.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
