Nikolas Sargeant
ASIC Commissioner Alan Kirkland announced at an AFR Digital Assets Summit that many crypto-asset companies in Australia will need to be licensed, as several crypto assets are already considered financial products under existing laws.
Clarifying the Regulatory Landscape
ASIC's current regulatory framework centers on "financial products," encompassing financial investments, risk management, and non-cash transactions. However, the unique nature of cryptocurrencies has created uncertainty about which specific crypto structures require licensing. To address this, ASIC plans to release new draft guidance and seek industry feedback on proposed updates.
Kirkland emphasized the importance of consumer protection, stating, "Millions of Australians now hold crypto-asset investments, and ASIC wants to ensure they have access to important consumer protections provided by the current regulatory regime."
Addressing Licensing Gaps and Token Classification
Many crypto developers have opted not to obtain Australian Financial Services Licenses (AFSLs), following legal advice suggesting their investment products fall outside the scope of current laws. To tackle this issue, ASIC intends to update its guidance by November, clarifying the classification and treatment of specific crypto tokens representing digital ownership rights and related products.
ASIC's primary concerns revolve around potential consumer harm and market misconduct. The agency believes that licensing requirements will help mitigate risks, build consumer trust, and safeguard market integrity.
Intensified Enforcement and Industry Scrutiny
ASIC has ramped up its enforcement efforts in the crypto sector. Recent actions include claims against Kraken for inadequately educating Australian clients about margin trading risks and legal action against ASX for mismanaging the blockchain-based CHESS replacement project.
As Australia moves to regulate its growing crypto industry, these new licensing requirements and clarified guidelines aim to strike a balance between innovation and consumer protection in the digital asset space.
