The government has unveiled a proposal to introduce a regulatory framework to address the potential consumer risks associated with digital asset platforms, such as those holding cryptocurrencies, with plans to release exposure draft legislation in 2024.
The “Regulating Digital Asset Platforms” proposal paper, which is available from the Treasury website and open for consultation, will apply existing financial services laws to digital asset platform providers requiring them to obtain an Australian financial services licence (AFSL) if the platform holds more than $1500 of an individual’s assets or more than $5 million in total digital assets.
Assistant Treasurer and Financial Services Minister Stephen Jones explained the proposal was designed to protect Australian consumers and mitigate the risks and harms that have arisen due to the rapid financialisation of digital assets.
“Collapses of crypto platforms, both locally and globally, have seen Australians lose their assets or be forced to wait their turn amongst long lines of creditors. The proposed reforms seek to reduce the risk of these collapses happening by lifting the standard of the operation of platforms and increasing oversight,” Jones said.
“Our proposals have been designed to ensure they are consistent with other jurisdictions, adopt existing financial service laws as appropriate and create new bespoke obligations in the areas of highest risk.”
To this end, the proposal paper outlined several specific requirements for digital asset platforms, which encompass standardising platform contracts, setting minimum standards for the safekeeping of tokens and the management of digital assets and tokens during transactions.
Should the proposal be enacted without changes, digital asset platform providers will be granted a one-year transition period to acquire an AFSL following the date the bill receives royal assent.
Additionally, Treasury indicated a second round of public consultation will be launched in 2024 when exposure draft legislation for the proposal is expected to be released. The current phase of consultation closes on 1 December.
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