The Financial Planning Association of Australia (FPA) has shown its support for the idea of a “rulebook for cryptocurrencies” and has called for regulating exchanges instead of crypto assets..
In May, the Australian Law Reform Council (ALRC) proposed to address crypto regulation through a rulebook-style framework. which sets out a series of gradually updated compliance principles for local crypto businesses to adhere to.
The comments came via a presentation to the Treasury by the FPA’s head of policy, strategy and innovation, Ben Marshan, who also argued that the regulation of cryptocurrency exchanges should fall under the current financial services regime and not under a separate new legal framework.
“First, it would create an alternative and duplicative regulatory regime to regulate what is essentially the purchase and holding of a financial asset from retail or wholesale investors.”
“In second place, would require current financial services licensees to apply for and hold a different type of license, which would increase cost and regulatory duplication,” he added..
Mashan also stressed the need to roll out stronger consumer protection for local users of Australian cryptocurrencies. and highlighted that regulation of secondary providers (cryptocurrency exchanges, brokers, etc.) is the best way to go.
“The regulation of a financial product or service should not depend on the technology that underlies the asset,” he said.adding that “it would be practically impossible to regulate the product because it is so decentralized, that it is in all kinds of foreign jurisdictions.”
Focusing regulation on cryptocurrency service providers will remove a lot of “complexity” from the equation given the rapidly evolving nature of crypto and blockchain technology, Mashan argued, adding that the ALRC’s crypto rulebook idea for companies follow it “makes sense.”
“It makes it a lot easier because instead of having to work through thousands of pages of Company Law, people can go to a specific section, and it’s much more efficient.”
Speaking to Cointelegraph, Ryan Parsons, the co-CEO of local cryptocurrency exchange Swyftx, echoed Mashan’s calls, noting that his firm wants “sensible measures to support consumer protections” enacted soon so that Australia does not risk falling behind the United States and the European Union:
“Our preference is for cryptocurrency platforms to operate within the existing financial services licensing framework, albeit in a way that takes into account the unique characteristics of digital assets.”
“We believe that this is the best way to reduce complexity and cost, as well as build confidence in cryptocurrencies as an asset class among Australian investors,” he added..
Another key idea highlighted in the ALRC report was to introduce the Twin Peaks model of regulation, in which regulation is divided between an entity that is in charge of supervising the maintenance of the stability of the financial system, while the other is in charge of the conduct of the institutional market and the protection of the consumer.
The same model is used in Australia’s financial regulation systemin which the Australian Securities and Investments Commission (ASIC) is responsible for good market conduct and consumer protection, while the Australian Prudential Regulation Authority (APRA) is responsible for the stability of the financial system.
Since the Liberal Party was forced out of government in May, the regulatory landscape for crypto in Australia has become uncertain.as the Labor Party seems to have other fish to fry.
Nowadays, Labor has yet to come up with any concrete initiatives, but has noted that introducing stronger consumer protection in the realm of cryptocurrencies will be a key area of focus..
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