Sydney, Oct 16, 2023 -Australia plans to protect people from cryptocurrency collapses by forcing the platforms to get a financial services licence, the government said Monday.
Any crypto exchange or digital asset platform with more than Aus$5 million (US$3.2 million) in aggregate assets would have to comply, the Treasury said in a proposal paper.
About one in four Australians own some cryptocurrency, it said.
Cryptocurrencies such as Bitcoin rely on decentralised cryptography to secure transactions instead of the traditional banking system.
“Collapses of digital asset platforms, both locally and globally, have seen Australians lose their assets or be forced to wait their turn amongst long lines of creditors,” the Treasury said.”These reforms seek to reduce the risk of these collapses happening, by lifting the standard of their operations and increasing their oversight.”
The government invited feedback on its proposal by December 1, with further consultation due in 2024 on proposed legislation.If they are required to get a licence, digital asset platforms would be governed by Australian financial services law.
The law includes minimum solvency and cash reserve requirements and the need to be efficient, honest and fair, keep records, and manage conflicts of interest.
The platforms would also be subject to specific standards governing their holding and transacting in cryptocurrencies.
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