Australia is moving in the right direction of good regulation in the crypto industry after implementing new rules requiring crypto firms to obtain financial services licenses. This step is made as part of the country’s strategy to enhance regulation of the rapidly growing crypto market.

This will significantly affect a large number of the cryptocurrency companies operating in Australia as the Australian Securities and Investments Commission (ASIC) leads the changes.

Stricter Oversight by ASIC

Australia’s Securities and Investments Commission is set to tighten the overall attention on the Cryptocurrency market and companies. Custodian and exchange providers have to obtain a financial services license to provide crypto financial services. This licensing requirement is intended to safeguard these companies as well as their investors, and to provide them with a framework that emulates the one that standardized financial service providers work under. The aim is to enhance the indexes of investors’ protection, and in turn, it is necessary to make sure that crypto firms adhere to the standards that exclude the risks that come together with cryptocurrencies.

It now seems that ASIC is following the general trend around the world, as more and more countries, such as the USA and the UK, have also stepped up regulation of the cryptocurrency market. The new regulations are expected to be beneficial to the investor and many people think that it will promote a safer space for Australians who are transacting in the digital asset market.

Impact on Crypto Firms

It is clear that the introduction of mandatory licensing will affect crypto firms operating in Australia in question. Anyone found operating without licenses may be forced to cease operation until they have received accreditation from ASIC. This will take its toll on some service delivery and may even push some of the smaller chaps out of business if they cannot abide by the new rules. More often than not, it will call for redesigning their policies and controls in light of the government’s laid down expectations.

However, there is an understanding that the regulation may also have its good side, that is; the regulation has its positive side as well. With these licenses in place, the firm itself will probably find a rise in consumer’s confidence where investors are more comfortable dealing with a financial service that has obtained licenses and is regulated. In the long run this shift could help the market to grow and gain traditional investors as a source of growth.

It is now important to synchronize with International Regulations

Australia also has comparable licensing requirements for any organization engaging with any form of crypto assets in a bid to strengthen the push on regulating digital assets. The United States, the United Kingdom and the European Union have also introduced similar measures aimed at the goals of ensuring legal clarity effect in investment protection. The objective is to address dirt such as fraud and manipulation that is evident mostly with emerging cryptocurrencies because the market has been relatively unconstrained.

Hence, including Australia into the sphere of the international standards of cryptocurrencies places the country among leaders in the world market. It also achieves a way of guaranteeing that Australian crypto firms will be able to compete at the international level without being slowed down by some probably inadequate regulation. Although the use of cryptocurrencies is gradually increasing and at a slow rate, there is a need to have the right measures and policies in place for boosting the growth of future developments in the market.

Our Take

These new licensing requirements mark one of the major significant changes in the entire crypto space in Australia. There may be some issues with relation to following the rules which are much more stringent than the ones that have been proposed up till now, but because these rules are going to be much more effective in the long run, they are believed to be much higher. Thus, forcing firms to adhere to financial service standards, Australia is setting an example for how the crypto space should look like: safer and more secure.

However, it is suggested that to ensure the influence of the regulators does not slow them down these crypto companies will have to continuously adapt to such changes. While ASIC will most probably lead to higher risk for all the stakeholders, investors are likely to get better protection and therefore, the market in Australia will be more appealing to them. It was probably directed at making the asset more palatable across the country as regulation is often a perception of mainstream viability.