Parliament is considering a new Bill that would establish a licensing regime and reporting requirements for digital asset exchanges. The Digital Assets (Market Regulation) Bill 2023 builds on the Digital Assets (Market Regulation) Bill 2022 published last year and seeks to regulate digital asset exchanges in Australia.
The regulation of cryptocurrency in Australia has been found to be inadequate by a Senate inquiry which recommended changes to taxation laws, licensing, and regulatory regimes to encourage digital and crypto-asset businesses to set up in Australia. Part of the Bill aims to define key terms used in digital assets, particularly defining:
- Regulated digital assets, including asset-reference tokens, electronic money tokens, and exchange tokens
- Stablecoins, both as capture and commodity-backed tokens, and
- Cryptocurrency exchange tokens
Additionally, the Bill will put forth various licensing conditions for any entity offering trading and/or exchange of regulated digital assets. Under the new licensing regime, exchanges will be subject to ASIC business requirements for regulated digital assets, safeguards for providing custody of digital assets, and new stablecoin licences for currency backing. The Bill also mandates reporting requirements for the Reserve Bank of Australia for their central bank digital currencies.
ASIC will be the primary body overseeing the licensing process. Rules for application have not yet been introduced, however, licence applicants will have the right to appeal ASIC decisions to the Administrative Appeals Tribunal if they are dissatisfied with their licence decision. Businesses will have a 3 month transitional period to comply with licensing requirements if the Bill passes.
For a full reading of the Bill, see here.
