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Australia Tightens Grip on Crypto Startups With Corporate Law Changes

Published
Kurt Robson
Published
By Kurt Robson
Edited by Samantha Dunn

Key Takeaways

  • Australia wants all crypto exchanges to hold financial services licenses. 
  • The country has so far had limited success in its crackdown on the crypto industry.
  • As of 2022, over one million Australians held at least one form of cryptocurrency.

Australia is set to further enhance the regulation of the cryptocurrency industry by requiring all crypto exchanges to hold financial services licenses. 

The move will see the country’s corporate watchdog push for updated regulations to be enforced over the next two months, the Australian Financial Review  reported. 

Australia Tightens Grip on Crypto 

The new licensing requirements are required as the Australian Securities and Investments Commission (ASIC) considers most major crypto assets to be relevant under the country’s Corporate Act, according to ASIC commissioner Alan Kirkland. 

Crypto developers in the country have been confused about whether or not they should obtain an Australian Financial Services (AFS) license. 

An AFS is needed for afinancial product,which is when an individual takes on a financial risk or makes an investment. 

ASIC is currently embroiled in two major court cases involving two crypto startups that have not obtained a license. 

ASIC’s message is that a significant number of crypto-asset firms in the Australian market are likely to need a license under the current law. This is because we think many widely traded crypto assets are a financial product,Kirkland said.

ASIC Has Had Limited Success 

ASIC will update itsInformation Paper 225for a November release. The regulatory paper will clarify how cryptocurrencies and other financial products should be treated

So far, ASIC has had limited success penalizing crypto exchanges without a license. 

Block Earner, an Australian crypto startup founded in 2021, was taken to court by ASIC, which alleged that the company was working unlawfully without a license. The Federal Court sided with Block Earner , claiming the startup had been operating lawfully. 

ASIC sued Finder Wallet for not registering as a financial service. The court ultimately ruled that the startup did not need a license to operate

The Australian watchdog is appealing both court decisions. 

Australia and Crypto

Like the rest of the world, Australia has an evolving relationship with cryptocurrency.

In 2022, research firm Roy Morgan  found that over one million Australians own at least one form of cryptocurrency, including Bitcoin, Ethereum, and Cardano. 

A 2023 study by the Australian Securities Exchange (ASX)  found nearly 3 in 10 Aussie investors plan to buy crypto in the next year, with 15% already holding digital assets.

However, While Australia has generally welcomed innovation in the crypto space, a strong emphasis on consumer protection has remained.

According to a Finder report powered by Coinbase, 50% of Australian owners  said the security and reputation of an exchange are the most important features to them.

Last month, the Australian Competition and Consumer Commission (ACCC) found that half of crypto-related Facebook ads  were scams.

The ACCC alleged that Meta was aware of crypto scams in its ads for the past six years. 

“Meta has been aware that a significant proportion of cryptocurrency advertisements on the Facebook platform have used misleading or deceptive promotional practices,the company said in a court ruling. 

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