Australia Makes A Move Toward Regulating Cryptocurrency Exchanges

ARK Disrupt Issue 88: August 21st, 2017 https://ark-invest.com/research/ark-disrupt-issue-88

This week, the Australian government proposed new regulations to address the recent proliferation of fintech startups.  The surge in bitcoin trading, as shown in the chart below, has generated particular interest.

Chart of Bitcoin volumes March 9, 2013-Jul, 29, 2017 in Australian dollars

First, to strengthen the Anti-Money Laundering and Counter-Terrorism Financing Act, and to bolster the authority of the Australian Transactions and Reporting Analysis Centre (AUSTRAC), the Australian government is introducing reforms to regulate digital currency exchanges.  AUSTRAC’s mandate is to reduce the threat of organized crime and terrorism financing. It conducts audits to ensure that exchanges comply with anti-money laundering (AML) and Know Your Customer (KYC) regulations. Interestingly, while not deeming them currencies or commodities explicitly, this legislation does recognize and validate cyrptoassets implicitly.

Second, the Australian Prudential Regulation Authority (APRA) has proposed changes to bank licensing procedures to accommodate fintech start-ups.  Specifically, APRA has proposed phased-in licensing for new entrants with unique business models and advanced technology solutions. Its objective is to foster innovation and competition in the banking sector, to the benefit of consumers and businesses in Australia.

These regulatory proposals will add to fintech’s momentum in Australia and elsewhere. Governments around the world seem to understand the need to accommodate fintech, including cryptoassets, to stimulate innovation and remain competitive.

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2018-01-09T22:25:14+00:00 August 22nd, 2017|