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The Australian Treasury has released a statement on “developing an innovative Australian digital asset Industry,” effectively a confirmation new regulations are to hit the crypto sector Down Under.
There are two major takeaways to note here.
Firstly: Crypto exchanges, or websites fulfilling that capacity, will be required to acquire an Australian Financial Services Licence (AFSL), which is enforced by the Australian Securities and Investments Commission (ASIC).
So, in a roundabout way, ASIC will now be taking a firmer grip on the reigns of cryptocurrency companies.
Secondly: “Stablecoins” – a type of crypto coin or like-for-like digital asset that is often pegged to the value of a currency to protect cryptocurrency producers and exchanges from wild swings in volatility – will now fall under the Australian Prudential Regulation Authority (APRA) as well.
Think of APRA like ASIC’s lesser-known cousin but perhaps more important. Think of it like this: ASIC goes after individual bad actors while APRA is more focused on the totality of Australia’s financial system.
Between the lines, it makes sense stablecoins fall to APRA. Were a stablecoin tied to the AUD to get large enough, there are worrying implications for “traditional” forex markets if that stablecoin were to undergo some kind of black swan event.
So far, so good – and it all makes sense. It’s not like crypto regulation is new in Australia. We were among the first countries to adopt laws surrounding the experimental assets and they’ve been taxable since 2014.
So what does this mean for the average crypto trader?
Well, not much, really. If you’re using a service that doesn’t have an AFSL licence or is unlikely to get one, maybe start shopping around for a new place to keep your reserves.
As for stablecoins, they’re going to become “stored-value facilities,” which are, to quote an October 2019 report from the Council of Financial Regulators: “Payment services that enable customers to store funds in a facility for the purpose of making future payments.”
So, basically, websites. Websites that allow you to buy and sell crypto. It sounds a lot like “stored-value facilities” is actually just anything that kind of acts like a bank but isn’t one.
So APRA will be taking a closer look at crypto exchange websites, which they already did. This is now just including stablecoins.
Interestingly, a look at APRA’s Enhanced Regulatory Sandbox – a sort of application-only regtech offering that allows fintech companies to virtually launch products to see whether they do or don’t comply with Australian laws – shows no less than four companies currently using the Sandbox with the hopes of launching crypto businesses.
Two of those are hoping to launch NFTs (good luck), another is keen to use blockchain to ensure the accountability of certified-sourced building materials when applying for green home loans, and finally, ByteFederal Australia Trading Pty Ltd is trying to establish a way to pay for things with crypto down at the local deli.
So these regulations really matter more to cryptocurrency industry companies, rather than individual players – but it still doesn’t hurt to be aware of what’s going on.
Typically, this latest government announcement from the Treasury is a lot of fanfare about not very much at all, once you get past the letterheads.
How unusual.
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