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Crypto regulation finally coming to Australia with exchanges facing bank-like rules

Crypto regulation finally coming to Australia with exchanges facing bank-like rules

  • 21.03.2025 01:07
  • smartcompany.com.au
  • Keywords: Regulation

The Australian government has introduced crypto regulations treating exchanges like banks, requiring them to meet financial service standards including honesty, capital requirements, and conflict of interest avoidance. Stablecoins will be regulated under a new framework, while no new tax laws are planned for now. The industry remains cautiously optimistic about the move toward regulatory clarity.

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Estimated market influence

Kraken

Positivesentiment_satisfied
Analyst rating: N/A

Kraken's managing director welcomed the new regulations, particularly regarding reducing the risk of debanking.

Coinstash

Positivesentiment_satisfied
Analyst rating: N/A

Coinstash co-founder expressed optimism about regulatory clarity.

Zerocap

Neutralsentiment_neutral
Analyst rating: N/A

Chief investment officer acknowledged progress but warned about balancing security and innovation.

Context

Analysis of Australian Crypto Regulation and Market Implications

Overview

  • The Australian government has introduced new regulations treating crypto exchanges similarly to banks.
  • These rules apply to cryptocurrency exchanges and fintechs holding customer assets, requiring them to meet financial services standards.

Key Requirements

  • Governance Standards:
    • Must provide services honestly and fairly.
    • Avoid conflicts of interest.
  • Capital Requirements:
    • Minimum capital requirements to prevent insolvency (e.g., the collapse of).
  • Stablecoins Regulation:
    • Regulated under a new ‘stored-value facility’ framework overseen by the Australian Prudential Regulation Authority (APRA).
  • Tax Implications:
    • No new crypto-specific tax legislation for now.
    • The ATO will form a working group to provide clearer tax advice under existing laws.

Industry Responses

  • Kraken: Welcomed the regulations, particularly for reducing debanking risks.
  • Coinstash: Praises the changes for providing much-needed clarity after years of regulatory uncertainty.
  • Zerocap: Acknowledges progress but warns about balancing security and innovation.

Competitive Dynamics

  • The move aligns Australia with global trends toward crypto regulation, though other jurisdictions (e.g., Singapore, UAE, EU) have more advanced frameworks.
  • Industry players hope the regulations will encourage consumer protection and business growth while maintaining a competitive edge.

Long-Term Effects

  • Regulatory Clarity: Aims to reduce risks and increase trust in the crypto sector.
  • Global Competition: Australia risks falling behind if regulations are not aligned with international standards.
  • Innovation vs. Compliance: Striking the right balance will be crucial for fostering growth.

Regulatory Implications

  • The $7.5 million allocated in the 2024 budget highlights limited initial investment but signals a shift toward engagement.
  • Draft legislation is expected later this year, with close scrutiny from local startups and firms.

This analysis underscores the cautious yet significant regulatory shift in Australia's crypto sector, balancing security, innovation, and global competitiveness.