Australia’s federal government plans to regulate the country’s crypto market, a move that has been described as one of the most significant policy reforms in the nation’s payment ecosystem in 25 years. According to one report, Australia is seeking to create a ‘tick of approval’ system for crypto exchanges.
Details of The Licensing Process
The planned licensing of crypto exchanges was announced by Jane Hume, the Digital Economy Minister. According to Hume, the goal is to ensure that Australians have more confidence in crypto exchanges so they can invest in crypto safely and securely.
During her speech at the Blockchain Australia event, Hume noted that the digital asset economy had grown into a sector worth $AUD2.1 billion. The minister noted that with proper regulation, it could grow into an industry worth $AUD68.4 billion by 2030. According to Hume, the Morrison government was committed to ensuring customers could trust exchanges that they leverage to trade crypto.
Trust on Crypto Exchanges
Trust in Australian crypto exchanges is at an all-time low in Australia after two leading crypto exchanges in the country collapsed in 2021 within two months of each other. The first was MyCryptoWallet, which collapsed and appointed liquidators to oversee its winding down. Within two months, Blockchain Global’s ACX exchange also collapsed.
To address the issue of sudden collapse, crypto exchanges will be required to abide by stricter custody requirements, which will allow investors to have access to their funds at all times. However, the minister noted that the government would not intervene to protect consumers from the ebbs and flows of crypto markets.
For instance, BTC reached an ATH in November 2021 of $69,000 before its price fell by over a third to date. Hume noted that crypto prices would continue to be volatile, and the government would not and should not intervene in these markets.
Australian Stamp of Quality
Hume said that when Australians used a licensed crypto exchange, they could trust that it delivered on its commitments to customers and would have appropriate protections in place. According to the minister, it would be “a uniquely Australian stamp of quality. The healthy heart tick of approval for your crypto exchanges.”
Possible Outcome
While most leading exchanges will pass through the approval process, most small and ill-equipped crypto exchanges will likely collapse. Some industry leaders in the sector have welcomed it. They believe that with Australia having one of the biggest crypto adoption rates globally, it made sense for the nation to lead in crypto regulation.
Today, there are over 600 licensed crypto exchanges in the nation. When the new regulation passes, there could end up being just 20 to 30 exchanges in the country. It is worth noting that the new regulation will not guarantee that other exchanges will not collapse. However, it will ensure that customers’ assets are protected in case of such a collapse.
While new regulations could help to end the trend of debanking in Australia, there is still a long way to go. However, early signs are encouraging with one of the nation’s biggest banks joining the crypto industry.
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