Regulatory Burden and Industry Concerns
The Australian Securities and Investment Commission (ASIC) has sent shockwaves through the country’s crypto industry by signaling an expansion of its power, causing widespread concern among companies. According to experts, ASIC considers many crypto assets as financial products, which would add a significant regulatory burden that may prompt businesses to explore opportunities elsewhere.
A "Hostile Crowd" at AFR Crypto Summit
The tension was palpable at the Australian Financial Review (AFR) crypto summit on Monday, where ASIC’s Alan Kirkland made the comment that set off the industry’s alarm bells. He told a host of crypto executives and investors that ASIC thinks "many widely traded crypto assets are a financial product," implying that many would need a license under current laws.
Industry Leaders React to Regulatory Threats
The implications of Kirkland’s comments were not lost on industry leaders, who expressed concerns about the potential for onerous conditions and court action. Amy-Rose Goodey, Managing Director of the Digital Economy Council of Australia, warned that ASIC’s "more stringent approach" could drive companies offshore.
"We are seeing a more uncertain business environment, which is likely to lead some businesses to explore opportunities abroad," she told CoinDesk.
Michael Bacina, a partner at law firm Piper Alderman, echoed Goodey’s concerns. "If ASIC maintains their regulation by enforcement approach…then ASIC will be taking a path the U.S. SEC took years ago. Having the courts set the regulatory perimeter is highly inefficient for both the regulator and the industry."
ASIC’s Approach: A "Fine" on Innovation?
The irony of Kirkland’s comments was not lost on Fred Schebesta, founder of Finder Wallet, who was on stage when the fire alarm went off. He compared ASIC’s approach to giving the Wright Brothers a fine because they didn’t have a pilot’s license.
"The laws need to be updated to provide certainty," Schebesta told CoinDesk. "Even ongoing maintenance and compliance post-licensing can be quite burdensome."
Uncertainty and Gray Areas in Crypto Regulation
The situation highlights the gray areas in Australia’s crypto regulation, with draft legislation announced in 2023 still not enacted. According to Kate Cooper, CEO of Zodia Custody, many crypto companies are finding the status quo "untenable" and planning to seek opportunities in jurisdictions where regulation is clearer.
"There still remain many grey areas in regulation of crypto, especially with further delay to the introduction of the new regulation which is not expected until mid 2025 at the earliest," Cooper said in a WhatsApp message.
Delayed Legislation: A Recipe for Regulatory Uncertainty
The delayed introduction of new regulations has only added to the uncertainty surrounding crypto regulation in Australia. Andrew Charlton, a member of parliament representing the government, was unable to say whether the bill would appear before the next federal election.
One thing is certain, however – ASIC’s approach has sent shockwaves through the industry, leaving companies wondering about their future in Australia.
Conclusion
The Australian Securities and Investment Commission (ASIC) has signalled an expansion of its power, causing widespread concern among crypto companies. With many considering most crypto assets as financial products, regulatory burdens are expected to increase, prompting some to explore opportunities elsewhere.
Industry leaders have expressed concerns about the potential for onerous conditions and court action, highlighting the need for urgent industry consultation with policymakers. As the country’s crypto regulation remains in limbo, one thing is clear – uncertainty and regulatory challenges will only continue to plague the industry unless decisive action is taken.
Recommendations
- Industry leaders should engage in urgent consultations with policymakers to address concerns about regulatory burdens and court action.
- ASIC should provide clarity on its approach to regulating crypto assets and ensure that any new regulations are workable for businesses.
- Policymakers should prioritize updating legislation to provide certainty for the industry, rather than relying on piecemeal regulation.
Further Reading
- "Australia’s Crypto Regulation: A Guide" – A comprehensive guide to understanding Australia’s crypto regulation framework
- "ASIC’s Approach to Crypto Regulation: What You Need to Know" – An analysis of ASIC’s approach to regulating crypto assets and its implications for businesses