The treasury department of the Australian government has released a consultation paper on Monday, defining cryptocurrencies and outlining its plan to impose a regulatory framework on the growing sector.
The paper defined crypto-assets as “a digital representation of value that can be transferred, stored or traded electronically” and uses “use cryptography and distributed ledger technology.”
In addition, it clarified that crypto assets are a subset of digital assets and consist of “cryptocurrencies like BTC, Ripple and Litecoin, utility tokens like filecoin and basic attention token, and security tokens.” Moreover, it may include non-fungible tokens (NFTs).
Further, it defined the crypto asset secondary service provider as any natural or legal person who, as a business, either provides crypto to fiat or crypto to crypto trading services. Additionally, it will cover services offering the transfer of crypto assets, custody and participation in or provision of other crypto asset-related activities.
The government is now seeking feedback on the definitions that would be applied across all Australian regulatory frameworks. It is also asking if all types of crypto assets should be covered in the licensing regime or should exclude some categories like NFTs.
“The introduction of secondary service providers and centralized systems actors introduces risk, and a requirement for trust. This leads to a need for regulation of secondary service providers,” the paper noted.
One License for All Crypto Service Providers
The licensing regime of the crypto asset secondary service provider (CASSPr) would be separate from the existing Australia Financial Services (AFS) licensing.
These crypto companies need to ensure several things including business ethics, technological availability, dispute resolution arrangements, minimum financial requirements and several other things.
Though there would be only one license type for both crypto trading services providers and custodians, the obligations of the platforms would depend on the offered services.
“The obligations would be administered in a flexible manner with the aim of ensuring that industry participants behave with honesty, fairness, integrity and competence while keeping a simple, consistent and efficient regulatory approach,” the paper added.
Furthermore, the consultation paper is seeking two alternative options to regulate the crypto industry: one is to bring all crypto assets under the existing financial services regime by defining them as financial products, while the other is to develop a self-regulatory regime within the Aussie crypto industry.
