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New Australian Bill Seeks to Regulate Digital Asset Platforms

 |  October 16, 2023

The Australian Treasury has put forth a new regulatory proposal aimed at bringing digital asset platforms under the purview of the Australian Financial Services Licence (AFSL) framework. The proposed changes are designed to address issues related to “consumer harms” associated with digital assets, including problems arising from ineffective management, governance deficiencies, operational vulnerabilities, conflicts of interest, and instances of fraudulent activities.

To address these concerns, the proposed regulatory regime introduces four key amendments to the existing legislative procedures.

Firstly, the proposal calls for digital asset platforms to be subject to the same standards as other financial services providers within the country’s current framework. This approach is referred to as “similar activity, similar risk, same regulatory outcome.”

The second amendment expands the scope of licensing requirements for digital asset platforms. If the proposal becomes law, any business offering custodial or depository services, financial product advice, or holding more than AUD 1,500 per client or more than AUD 5 million in total assets would be required to obtain an AFSL.

Related: Australian Lawmakers Submit New Crypto Regulation Bill

The third amendment focuses on facility contracts, which can evolve into platforms by partnering with other functions. Under this amendment, all arrangements involving digital asset facilities would need to be structured as non-discretionary arrangements, meaning that facilities must operate according to pre-agreed and transparent rules and procedures.

The final proposal targets the regulation of digital assets that do not fall under the category of financial products, such as tokenized collectibles. This amendment mandates that platforms dealing with these types of products must now adhere to minimum standards and functions in areas like token staking and asset tokenization.

The Australian Treasury’s proposed regulatory changes aim to enhance oversight and ensure the integrity of digital asset platforms while protecting consumers from potential risks and fraudulent activities. These proposals signal a significant step towards a more robust and comprehensive regulatory framework for the digital asset sector in Australia.

Source: Fintech Futures