Australia Moves to Tighten Safety Around Crypto in 2023

The Australian government has promised to establish a framework for the licensing and regulation of crypto service providers in 2023, the nation's Treasury announced on Wednesday.

The move is part of a plan to modernise Australia’s financial system and comes in the wake of the FTX collapse that forced the management of its Australian entities to hand over control to licensed insolvency practitioners who independently assess the financial situation.

Developing appropriate custody and licensing settings to safeguard consumers will be part of the next steps the government takes, the announcement said.

"Unfortunately, our regulatory architecture has not kept pace with changes in the market," said the joint release by Australia's Treasurer Jim Chalmers MP and Assistant Treasurer and Minister for Financial Services Stephen Jones. "In many areas, the previous government sat on its hands. In other areas, it made announcements but didn’t deliver."

Significantly, the government will assess which tokens or "digital assets should be regulated by financial services laws" as part of its ongoing ‘token mapping’ work. In August, 2022, Australia's Treasury announced it would prioritize ‘token mapping’ work which involves uncovering the characteristics of all digital asset tokens in Australia including charting the type of crypto asset, its underlying code, and any other defining technological feature.

The framework for the licensing and regulation of crypto service providers will be part of "a strategic plan for the payments system" of Australia set to be released in the first quarter of 2023 for which a consultation paper was released simultaneously. The consultation paper invites feedback till Feb. 6, 2023 and touches upon various aspects of the crypto eco system including digital wallets, stablecoins, crypto-assets, and central bank digital currencies.

This also includes exploring “the policy rationale for an Australian CBDC, including investigating the economic, legal, regulatory and technological considerations associated with an Australian CBDC.” Australia's central bank is expected to complete its CBDC pilot by mid-2023.

On Tuesday, news emerged that CEO Laura Mercurio departed Blockchain Australia, the nation's industry body advocating for appropriate regulation and policy. The Australian Financial Review reported that Mercurio left just weeks after her appointment in early September citing “differences of opinion” with the board.

Blockchain Australia and Laura Mercurio didn't immediately respond to requests for comments.

Read More: Australia's CBDC Pilot to Be Completed in 2023