Australian Regulatory Body to Develop Crypto Policies Focused on Outcomes

ASIC Commissioner Alan Kirkland emphasized the importance of addressing the “regulatory trilemma” in financial innovation, emphasizing consumer protection, market integrity, and fostering financial innovation.

The Australian Securities and Investments Commission (ASIC) is gearing up to unveil a series of regulatory reforms tailored to the crypto sector, with a focus on desired regulatory outcomes.

During “The Brief – Open Forum” at Blockchain APAC’s Policy Week on March 20, ASIC Commissioner Alan Kirkland outlined the organization’s strategy to nurture responsible financial innovation.

Kirkland stressed the need to tackle the “regulatory trilemma,” which encompasses consumer protection, market integrity, and the promotion of financial innovation.

ASIC’s objective is to cultivate confidence in crypto and decentralized financial systems by enhancing oversight and striking a balance among the trilemma elements. Kirkland noted that ASIC has provided informal regulatory guidance to over 900 entities since 2016.

Discussing the forthcoming reforms, Kirkland stated:

“In short, our desired outcome is a clear set of rules that maintain market integrity and mitigate the risks to consumers and investors – backed by mechanisms that promote compliance with these rules and enable us to enforce them effectively.”

ASIC has also received numerous proposals for tokenizing financial products and real-world assets. Kirkland indicated that some forms of tokenization will fall under the current regulatory framework, while others will be subject to the Government’s digital asset platform proposal.

Kirkland believes that ASIC’s innovative approach to regulation can mitigate risks and facilitate wider adoption of digital assets.

In October 2023, the Department of the Treasury issued a consultation paper proposing that crypto exchanges must obtain a financial services license from the local financial regulator.

Under the proposed rules, any crypto exchange holding more than 5 million Australian dollars ($3.2 million) or over AU$1,500 ($946) per individual would need a license from ASIC.

While the proposal sparked mixed reactions from crypto exchanges in Australia, the Treasury clarified that the consultation paper aims to gather feedback on various questions and proposed regulations.