Australia's stance on digital currencies is becoming increasingly apparent, as the country gears up to delve into the realm of central bank digital currency (CBDC) research, exploring the implications and potential implementation of digital currencies within its financial ecosystem.

This approach highlights Australia's commitment to remaining at the forefront of technological innovation and adapting to the evolving landscape of the global financial market.

Australia's Tighten Crypto Regulation

Australia's Treasury has revealed plans to introduce a comprehensive licensing regime for crypto exchanges.

This initiative aims to bolster consumer protection, bring clarity to the digital asset sector, and align the nation with global regulatory standards.

New Licensing Framework for Crypto Exchanges

According to the proposed framework, cryptocurrency exchanges operating in Australia must obtain an Australian Financial Services license (AFSL) from the Australian Securities and Investments Commission (ASIC).

This measure targets exchanges handling more than AUD 1,500 of any single client's assets or with total assets surpassing AUD 5 million, emphasising the need for robust financial and operational standards to safeguard customer interests.

The Treasury's timeline outlines the release of draft legislation covering licensing and custody rules for crypto asset providers by 2024.

Following the legislation's enactment, crypto exchanges will have a 12-month transition period to align their operations with the new regulatory framework, suggesting that Australian digital asset platforms may not receive a license until 2025 under this updated regime.

The government has initiated a consultation process to gather feedback from industry stakeholders and the public, demonstrating a commitment to developing well-informed and balanced regulations for the broader community.

The proposed regulatory approach aims to strike a balance between consumer protection and fostering innovation, acknowledging the rapidly evolving nature of the digital asset landscape.

Crypto Exchanges React to Australia's Proposed Regulation

The proposed regulation in Australia prompted contrasting reactions from the Crypto Exchange markets.

On one hand, Caroline Bowler, the CEO of BTC Markets, hailed the latest development in Australia's proposed regulation of crypto-asset exchanges as a "key milestone," in response to the consultation paper presented by the Commonwealth Treasury.

On the other hand, Jonathon Miller, Director of Kraken Australia, expressed disappointment with the recent developments, describing the consultation paper as an attempt to fit crypto within the confines of existing financial services regulation.

Jonathon Miller said:

"Australia is now in the unfortunate situation where our regulation has taken a very long time, so we’re taking the approach of shoehorning crypto into existing financial services regulation,"

Australia's CBDC Research

Australia is also progressing in central bank digital currency (CBDC) research.

The Reserve Bank of Australia and the Treasury plan to publish a joint report in 2024, outlining CBDC research insights and a roadmap for future endeavors.

This collaborative effort highlights the nation's proactive exploration of the possibilities and implications of digital currencies.