Australia Tightens the Screws on the Crypto Industry
The Australian Securities and Investments Commission (ASIC) is set to significantly tighten regulations on the cryptocurrency market. Under a newly proposed framework, most companies working with digital assets will be required to obtain a financial services license.
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The Australian Securities and Investments Commission (ASIC) is set to significantly tighten regulations on the cryptocurrency market. Under a newly proposed framework, most companies working with digital assets will be required to obtain a financial services license.
On December 4, 2024, ASIC published a press release proposing that cryptocurrencies be classified as financial instruments, bringing significant legal implications.
The new regulations would encompass a broad range of crypto-related activities, including stablecoins, staking, futures, and other instruments. This signals the end of a relatively unregulated period for the crypto industry in Australia.
Currently, cryptocurrencies are recognized as legal in Australia and classified as property, making them subject to capital gains tax (CGT).
For a comprehensive overview of cryptocurrency regulations in Australia, read our article.
What Does This Mean for Australia's Crypto Industry?
ASIC seeks to establish clear operational rules for crypto companies to protect investors and ensure market stability. According to the regulator, this goal is achievable only through heightened government oversight.
ASIC is the regulator of Australian financial markets. Source: shutterstock
Some experts have expressed concerns that the new regulations might drive Web3 startups out of Australia due to the challenges of operating within a stricter regulatory framework. Securing a license is a lengthy and financially burdensome process, requiring significant investments in time, money, and human resources while carrying the risk of heavy penalties. As a result, not all companies may find it viable to comply with the new demands.
Michael Bacina, a partner at Piper Alderman and renowned digital asset lawyer, remarked, “While other jurisdictions are supporting bespoke licensing regimes, Australia is going in another direction.” Consequently, many crypto companies will need to rethink their business models and increase investment in risk management systems.
The final version of the updated rules is expected to be released by mid-2025. Australian digital market stakeholders are invited to thoroughly review the proposed requirements and submit their feedback by February 28, 2025.
Related: WhiteBIT Expands to Australia
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