Category: Regulation

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Australia Crypto News Cryptocurrency Law Regulation

Aussie Regulator Asks Banks to ‘Proceed with Care’ Over Crypto

The Australian Prudential Regulation Authority (APRA) is in the final stages of drafting a letter to Australia’s financial institutions that will outline its expectations for the future of digital assets, in the wake of the UK’s recent statement on digital assets.

High Expectations for Financial Institutions

APRA has plans to provide the industry with more clarity in the coming months, cautioning banks, super funds and insurers planning to take on crypto. Chairman Wayne Byres said this week that the regulator was finalising its letter prescribing its requirements for how financial institutions deal with digital assets.

While the number of Australian financial institutions embracing crypto is so far limited, with the Commonwealth Bank becoming the first bank to offer crypto-related services in late 2021, it is necessary to achieve clarity on regulation as soon as possible. This comes as regulators overseas make similar moves.

https://www.apra.gov.au/apras-executive-and-governance

Much like our approach to climate risk, [the letter’s] underlying message is primarily one of: ‘by all means innovate, but proceed with care and in full knowledge of the risks’.

Wayne Byres, APRA chairman

However, not everyone is happy with the news, and social media has offered mixed responses. APRA claims that a regulatory framework for “stored value facilities” is a high priority, as these facilities will purportedly allow customers to store funds for future payments.

No Time to Waste in a ‘Global Competition’

Last week ASIC chairman Greg Medcraft urged Aussie regulators to join the crypto start-up race, encouraging the development of plans for the future of digital asset investment and technology. Medcraft said it was “a global competition” and if financial institutions didn’t get in now they could risk missing out.

As long ago as July 2021, Australian crypto companies were requesting more certainty regarding the regulation of the industry. At the time, this resulted in the Australian Fintech Senate allowing Aussies to submit their requests relating to technology and finance and how society might benefit from emerging technologies.

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Crypto News Cryptocurrency Law Regulation

Australian Consumer Watchdog Reports Uptick of Crypto Investment Scams

Crypto has officially overtaken conventional bank transfers when it comes to investment scams, according to the Australian Competition and Consumer Commission (ACCC).

Losses to investment scams increased by 90 percent to A$103 million in less than three months this year up to March 20, with the ACCC confirming payments to scammers are most often made in crypto.

No Regulation, No Control

According to Rami Greiss, the ACCC’s executive general manager for consumer and fair trading, “Because [crypto] is an unregulated product, there are no controls. There are no institutions that can be roped in to assist.”

Greiss was also quick to point out that only 12 percent of scams are reported, and thus figures could not be taken as absolute gospel. Citing the ACCC’s current lawsuit against Meta for allegedly publishing scam advertisements featuring prominent Australian public figures without their permission, Greiss said people were falling for scams through multiple channels.

People might meet someone through a dating or friendship site and then be drawn into a crypto scam that way. So it’s really multi-channel; I don’t think there’s one particular area [where] they can target you; it’s across the board.

Rami Greiss, executive general manager for consumer and fair trading, ACCC

Investment Scams Double Year on Year

According to a 2021 report by the ACCC, 4,763 Australians lost more than A$70 million in the first half of last year with more than half of that figure attributed to crypto investment scams. That represented a 53.4 percent increase on the 3,104 scams reported in the first half of 2020.

The Australian government recently announced that it would create a crypto badge of approval to license intermediaries such as exchanges.

Digital Economy Minister Jane Hume said that the licence would include a “fit and proper person” test and could include anti-hawking measures to prevent cold calling.

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Australia Banking Investing Regulation

Commonwealth Bank’s Crypto App Delayed Due to Regulatory Hurdles

The Commonwealth Bank of Australia’s (CBA) plan to offer 10 popular cryptocurrencies to customers through its banking app has been delayed due to regulatory issues as the Australian Securities and Investments Commission (ASIC) ensures the offering complies with its new design and distribution rules.

CBA announced its intention to start selling crypto direct to retail customers in November 2021, marking the first offering of this kind by any Australian bank.

First Foray May Help Clarify Regulatory Approach

The main regulatory sticking points for ASIC relate to the product disclosure statement for the crypto products, the intended target market, and ensuring consumer protections. 

Speaking at this week’s Australian Financial Review Cryptocurrency Summit, ASIC commissioner Cathie Armour suggested CBA was having trouble ensuring its crypto products complied with the requirements of ASIC’s design and distribution rules:

We’re interested in any sort of new innovation where we think there [are] real benefits of innovation being within our regulatory regime. There are a bunch of rules there that you need to follow.

Cathie Armour, ASIC commissioner 

The delays CBA is facing now may clarify the regulatory landscape moving forward and encourage other banks and traditional financial organisations to start offering crypto products.

Partnership Means Investor Funds Held Offshore

To help create its crypto offerings, the CBA has partnered with US-based cryptocurrency exchange Gemini. Under the partnership, Gemini provides custody services, which means investor funds are held offshore under the jurisdiction of the New York State Department of Financial Services. 

Pro-crypto NSW Senator Andrew Bragg has described this arrangement as “not ideal”, suggesting he’d eventually like to see Australian-based custodial services: “I think there’ll be some moral pressure on organisations in Australian businesses.”

Despite the regulatory issues it has faced, CBA has said the initial pilot of its in-app crypto offering was highly successful and that it intends to invest heavily in more crypto-related services in the future.

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Australia Investing Regulation

Former ASIC Chairman Calls for Urgent Australian Crypto Regulatory Clarity

Former Australian Securities and Investment Commission (ASIC) chairman Greg Medcraft has urged Australian regulators to join the crypto start-up race. He is joined by venture capitalist Mark Carnegie in pushing regulators to develop a plan that encourages digital asset technology and investment, according to the Australian Financial Review.

Sydney businessman Mark Carnegie shares his vision for a 'better society' to kickstart debate - ABC News
Investor, entrepreneur, Mark Carnegie. Source: ABC

Get On Board or Risk Losing Out

Australia is at risk of losing out on a multitrillion-dollar opportunity to generate revenue from companies in the digital asset sectors, business leaders have warned, after Britain released an ambitious plan to lure cryptocurrency players with tax and start-up incentives.

Medcraft and Carnegie have asked for a bipartisan approach in the face of elevated global competition to attract crypto start-ups building on blockchain technology. Their comments come soon after ASIC warned cryptocurrency companies that they would be held to the same standards as traditional finance companies.

Medcraft and Carnegie were speaking ahead of this week’s Australian Financial Review Cryptocurrency Summit in which Medcraft, a personal investor in Ethereum, the network that powers decentralised finance (DeFi) and NFTs, and Carnegie, who has invested in various crypto businesses from Singapore, said Australia risked falling behind other nations putting in place initiatives to attract players in the digital asset sector.

It’s a global competition.

Greg Medcraft, former ASIC chairman

EU Is Setting the Pace

Medcraft helped lead the digital asset policy at the OECD in Paris for almost four years before returning to Australia. As we know, the European Union is preparing a comprehensive regime for digital assets including cryptocurrencies in its Markets in Crypto Assets (MiCA) legislation. Medcraft added: “What is happening is governments around the world are realising you want to have an enabling environment to be the centre for crypto technology.”

Medcraft celebrated the landmark crypto plan announced by Britain’s Chancellor of the Exchequer, Rishi Sunak. Among the reforms, Britain plans to regulate stablecoins – digital currencies whose value is linked to fiat money – to pave their way for use in the country as a recognised form of payment.

“This area is so damn dynamic,” Medcraft said. “Do we want barriers or do we want encouragement? What is increasingly happening is a comprehensive government approach.”

Australia may not be progressing according to the pace Medcraft and Carnegie expect, but there is some action being taken by Australian regulators to reform its cryptocurrency plan.

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Australia Crypto News Cryptocurrency Law Regulation

ASIC Releases Guidance Note for Australian ‘Finfluencers’

The Australian Securities and Investment Commission (ASIC) has released a document outlining which financial influencers may be in breach of the law. The move is being met with contention by many of these so-called “finfluencers”:

Digital Assets Are ‘Financial Products’: Senator

Finfluencers have the capability to offer incorrect, or unwise, financial information or products to their followers, either intentionally or accidentally. Some of the points on this guidance note include ensuring finfluencers are properly licensed to deal in a financial product or provide advice on a product, along with managing content to ensure it is accurate and balanced.

While the guide does not explicitly mention the crypto industry and its advisers and influencers, as crypto is counted as “investing services”, the rules still apply. This is backed up by pro-crypto NSW Senator Andrew Bragg.

https://www.linkedin.com/in/andrew-bragg-3296b823/overlay/photo/

ASIC’s current policy applies the law to crypto to the extent that digital assets fall within the definition of a financial product.

Australian NSW Liberal Senator Andrew Bragg

The move from ASIC is being heavily critiqued online by several financial influencers, with many suggesting the guide is all-encompassing in the sense that almost anything in the way of advice could still influence someone to invest.

The tighter regulations will come with penalties of up to five years’ jail for individuals and extreme fines for corporations.

ASIC Cautions Investors and Exchanges

ASIC has issued finfluencer warnings in the past, with the commission last year urging young investors in particular to be cautious. ASIC has stated that while using social media is a viable means of collecting background information on a topic, such info may be unlicensed and inaccurate.

More recently, ASIC has issued a warning aimed at crypto companies, informing them that they should expect tighter regulations in the future with the aim of pulling the crypto industry into line with traditional financial industries.

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Crypto Exchange Crypto Hardware Wallets Crypto News Crypto Wallets Cryptocurrency Law Europe Regulation

EU Parliament Votes in Favour of KYC for Private Crypto Wallets

European Union lawmakers have voted in favour of controversial proposals that require exchanges to collect personal data from individuals who transact more than EUR 1,000 using unhosted wallets.

Bad News for Exchanges

The proposals were passed, albeit narrowly, and purport to effectively prohibit anonymous crypto transactions:

The underlying justification behind the proposals is that they intend to extend anti-money laundering (AML) requirements that apply to conventional payments over EUR 1,000 to the crypto sector. As Coinbase CEO Brian Armstrong noted, however, the burden imposed on exchanges would be extremely onerous:

Most of the pushback from industry is because non-custodial wallets aren’t necessarily customers, with commentators describing the measures as “anti-innovation and anti-privacy”.

Referring to Chainalysis data showing that less than 0.05 percent of crypto volume was related to crime, hardware wallet provider Ledger argued that the proposals were neither necessary nor proportionate. It further noted that they reduced financial freedom, consumer protection and financial inclusion, and put Europe at a competitive disadvantage relative to other jurisdictions.

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Proposals’ unintended consequences. Source: Ledger

While some noted that users would simply resort to decentralised exchanges or send EUR 999 at a time, others had a more humorous perspective:

Turning Up the Regulatory Heat

This year has already shown that European lawmakers are increasingly scrutinising the digital asset sector. A few weeks ago, the EU Parliament finally decided not to ban proof-of-work cryptocurrencies (effectively Bitcoin), after going back and forth on the matter.

The next battle is clearly over unhosted wallets and for now it appears as if the regulators are in the driving seat. Importantly, the laws have not been enacted and still need to go through tripartite meetings between the EU Parliament, European Commission, and European Council.

Despite expectations that little will derail the proposals in question, if there is one thing we know about the crypto sector it’s that it will never go down without a fight.

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Australia Crypto Exchange Cryptocurrency Law Regulation

Australia Announces ‘Badge of Approval’ Certificates For Crypto Exchanges

The Australian Securities and Investments Commission (ASIC) has announced that crypto exchanges can now receive a tick of approval. Any exchange that is government-approved will earn a “badge” signifying a uniquely Australian stamp of quality.

Senator Jane Hume, federal Minister for the Digital Economy, announced a market licensing regime for crypto exchanges at Australian Blockchain Week 2022.

https://www.senatorhume.com/about/about-senator-hume

Australian investors will be sure that if they use a licensed Australian exchange, they can trust that exchange will deliver on its commitments to customers and have appropriate protections.

Jane Hume, Minister for the Digital Economy

Senator Hume stated that she believes the way forward for the Australian crypto industry is through the regulation of exchanges. While ASIC badges of approval represent only a small change, it is seen as a positive step toward local cryptocurrency integration.

ASIC Busy on the Crypto Front

ASIC has had to deal with a plethora of cryptocurrency-related concerns recently, issuing a variety of warnings to Australian exchanges and investors. Most recently, it warned crypto companies to expect greater regulation in future, in line with those governing traditional finance companies.

In July 2021, ASIC chairman Joe Longo declared crypto trading a “significant area of concern“, particularly in the wake of the Covid-19 pandemic. And, in November 2021, ASIC shut down A One Multi, an unlicensed financial services business based on Australia’s Gold Coast, for suspected unlawful activity.

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Australia Cryptocurrencies Cryptocurrency Law Regulation

ASIC Warns Aussie Crypto Companies to Expect Higher Regulation Moving Forward

The Australian Securities and Investments Commission (ASIC) has warned cryptocurrency companies that they will be held to the same standards as traditional finance companies, as the prospect of digital asset regulation strengthens.

The news was shared by ASIC commissioner Cathie Armour at Blockchain Australia’s crypto conference on March 24.

Higher Crypto Regulations Coming

Armour detailed to conference attendees that the “growing maturity” of the crypto industry means that crypto businesses may need to alter how they interact with the regulator. Businesses looking to offer crypto-related products will be expected to meet the same requirements as all other companies in the wider finance industry.

https://www.linkedin.com/in/cathie-armour-50b89013a/overlay/photo/

We’re doing this because we’re keen to maintain our robust regulatory framework. We’re really looking for industry to work closely with us and to do a lot of their own homework to navigate the details.

ASIC commissioner Cathie Armour

This isn’t the first time Armour has bestowed a warning on the financial industry. She has previously stated that Aussie influencers – specifically, “finfluencers” – could face up to five years’ jail time for breaking financial advice laws.

Past ASIC Warnings to Investors

ASIC is repeatedly warning investors about various dubious practices occurring within the financial industry. Most recently, the regulator cautioned against switching to a self-managed super fund (SMSF) to invest in crypto. Following an increase in crypto marketing for “investment opportunites”, Aussies were being “enticed” to switch to an SMSF before investing.

In October 2021, ASIC began joining investor Telegram groups to warn about an increase in pump-and-dump schemes. ASIC contacted one particular private Telegram group of 288 members, involving potentially illegal market tip-offs, to warn those involved that they were being monitored.

In August 2021, ASIC again cautioned Aussies to beware of unlicensed crypto companies. The warning was warranted due to an increase in losses from trading crypto-related products.

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Australia Crypto Exchange Crypto News DeFi Regulation

Crypto Exchange FTX Officially Launches in Australia

FTX, one of the world’s fastest-growing crypto exchanges, is rapidly expanding its presence globally, having now established a local service in Australia as announced by crypto-billionaire founder and CEO Sam Bankman-Fried:

As per a company press release, FTX Australia will offer a full range of services, including an exchange, over-the-counter (OTC) products, and even derivatives.

The announcement coincides with recent moves by the Australian government to establish a “world-leading” regulatory ecosystem for digital assets.

Senator Proposes New Crypto Legislation

During the Australian Blockchain Week conference, NSW Senator Andrew Bragg proposed legislation that seeks to lay the groundwork for a proper regulatory framework in the country. Bragg laid out four principles that the mooted Digital Service Act needs to follow:

  • technological neutrality;
  • broad, flexible principles, ie, not a prescribed code;
  • regulation by a minister, not bureaucratic agencies; and
  • the need for cooperation within government.

Bragg stated that the government should adopt these four principles if it wants to refine its approach to the crypto ecosystem, including certain components of the decentralised finance (DeFi) sector, such as DAOs (decentralised autonomous organisations). 

This will show Australia is open for business and things are clear and clean.

Senator Andrew Bragg

Bragg’s proposal came a day after a consultation paper was issued by the government, asking the industry to provide feedback by the end of the month. 

Bankman-Fried said he was largely incentivised by the efforts of the local blockchain community to help establish a clearer regulatory ecosystem for digital assets:

We are encouraged by the important work being undertaken to establish a new digital asset licensing regime.

Sam Bankman-Fried, FTX founder and CEO

Earlier this month, FTX partnered with the Ukrainian Ministry of Digital Transformation to develop a platform for crypto donations to the besieged country’s war defence.

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Australia Crypto News DAO Regulation

Pro-Crypto Senator Bragg Says DAOs Threaten Australia’s Tax Base

Decentralised autonomous organisations (DAOs) needed to be “recognised and regulated as a matter of urgency”, according to Australian Liberal Senator for NSW, Andrew Bragg.

Speaking at the Australia Blockchain Week conference this week, Bragg said DAOs posed an “existential threat to the tax base” since they are recognised as partnerships and as such are not liable to pay company tax.

Australia Cannot Rely on Company Tax to Raise Revenue

According to Bragg, Australia’s “reliance on company tax is unsustainable” given that it accounted for only 17.1 percent of total federal government revenue in 2020-21.

“DAOs are self-regulating and transparent, with an in-built system for governance,” Bragg said, adding that legal recognition of DAOs also guarantees a set of “minimum standards” that should be legislated. These would give consumers the ability to distinguish between retail and wholesale organisations.

Bragg called for the Australian Treasury to address those issues while also “leaving the field open for DAOs to continue to live up to their name”.

In 10 or 20 years’ time we may well be talking about the inverse situation – applying the rules for cryptocurrency to traditional finance.

Andrew Bragg, NSW Senator

By the end of this year, the Australian government is expected to receive a report on digital asset taxation and undertake a token mapping exercise. It will also examine the potential of DAOs and how they can be incorporated into existing legal and financial frameworks.

Bragg Also Pushes for Policy on NFTs and Blockchain

Earlier this month, Bragg said the country also needed to hear from artists on the best way forward for digital asset regulation. Addressing Sydney’s inaugural 3D art NFT exhibition, Satellite, Bragg said policy specifically relating to NFTs needed to be implemented to stave off a potential “brain drain” on Australia’s arts economy.

Bragg has also urged the Australian blockchain industry to “pick up the pace” or risk falling behind other developed nations, adding that Australia was likely to miss an opportunity to become a world leader in cryptocurrency if the government was not given more power to prioritise digital asset reform.