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Australia Prepares To Regulate Digital Asset Platforms, Incl Exchanges, Not Tokens
The Australian Treasury has put forth a new consultation paper that suggests crypto exchanges should apply for a financial services license.
This proposal is part of the Australian federal government’s ongoing efforts to regulate the digital assets market.
Entitled “Regulating digital asset platforms,” the paper outlines a strategy to mitigate consumer risks while still fostering innovation within the sector.
The core idea is to regulate cryptocurrency exchanges and service providers, rather than individual cryptocurrencies or tokens.
Australia’s proposed regulations will apply the pre-existing financial service laws to the crypto exchanges instead of creating new, crypto-specific rules.
Cryptocurrency platforms that hold more than $3.2 million ($5 million AUD), or more than $946 ($1,500 AUD) per individual, will need to acquire a license from the Australian Securities and Investment Commission (ASIC).
Views on the proposal are divided among crypto exchanges in Australia.
Adam Percy, general counsel at Swyftx, praised the proposal for its focus on user protection and room for innovation.
Conversely, Jonathon Miller, director of Kraken Australia, expressed disappointment, suggesting that the paper is trying to fit crypto into existing financial services regulations.
The Treasury has emphasized that the paper seeks feedback, and the proposals are subject to change. It is worth noting that the paper did not address some significant concerns, like the recent debanking issues faced by digital asset exchanges.
Feedback on the proposals can be submitted until December 1, 2023. Read more here.
Understanding Australia’s Vision For Digital Assets: A Brief Summary
In recent years, the world of digital assets, an area that includes cryptocurrencies and tokens, has grown exponentially.
These digital currencies and assets, like Bitcoin or Ethereum, have become household names, and many people are curious about their potential.
Recognizing this surge in interest and the transformative potential of these assets, the Australian Government, as many governments in the world are doing, decided to step in with a clear plan.
They released a document titled “Regulating Digital Asset Platforms,” which can be seen as a roadmap for how they envision the future of these digital assets in Australia.
So, what’s the big deal about this document?
1. Protecting The Everyday User
This proposal’s heart is the Australian consumer – you, me, our friends, and families.
The government noticed that while digital assets offer incredible opportunities, they also come with risks.
Some platforms, which act as middlemen for buying, selling, or storing these assets, have failed in the past.
A notable example is the FTX platform, whose collapse affected 50,000 Australians.
The government wants to establish rules that these platforms must follow to prevent such incidents.
2. Encouraging Innovation
While ensuring safety is crucial, the government also recognizes the innovative power of digital assets.
They don’t want to stifle creativity or technological advancements. Instead, they aim to provide a safe playground where innovators can develop without accidentally harming consumers.
3. Aligning With The Rest Of The World
Digital assets are global, and what happens in one country can affect another.
By setting up regulations, Australia aims to align its rules with international standards.
This ensures that Australian businesses and consumers can interact seamlessly with the rest of the world.
4. Making Things Clear
The proposal introduces some terms to help everyone better understand the world of digital assets.
For instance:
- Entitlements: Think of these as the rights or benefits you get from a contract or deal.
- System of Record: This is like a secure diary storing all essential information.
- Tokens: These are a type of digital asset, like a unique digital coin.
- Digital Assets: A broader term that includes tokens and their associated rights.
In simple terms, the Australian Government is trying to ensure that Australians can participate safely and confidently as the world of digital assets grows.
They want to ensure that while we all enjoy the benefits of this digital revolution, we’re also protected from potential pitfalls.
Global powerhouses at G20 summit shape cryptocurrency framework.
Zucoins And Splitchain Is Designed To Meet Australia’s Digital Vision
Zucoins and the Splitchain network are already making strides when it comes to user safety, a key concern highlighted by the Australian government.
Their system eliminates the need for mining, reducing the risk of sky-high fee spikes or platform corruption through consensus.
The supply of Zucoins is capped at 100 million, providing a measure of predictability and stability.
Add to that, transactions on this network feature two-factor authentication (2FA) and expire if not completed within a certain time window, adding an extra layer of protection for users.
This means you have to create a transfer that uses the wrong receiver’s wallet address, and then send it to the person’s wrong contact details.
The incorrect receiver has to know your private details (such as your private encryption signing key), and still, they need to do all of this within the 90-second transfer validity window, before the transfer expires.
As you can probably tell, a ton of work has been done to make this a safe transfer process—far more so than anything else out there.
Innovation is at the heart of the digital asset field, and the creators of Zucoin and Splitchain understand this well.
The Splitchain network, a ground-up layer 1 solution, primarily caches the results produced by transacting peers, doing away with the need for competitive mining or staking validator pools.
This unique approach paves the way for more innovative solutions while reducing energy consumption, aligning perfectly with Australia’s vision for the digital asset landscape.
Zutopia, the upcoming Zucoins marketplace, is being designed specifically to avoid the need to hold users’ funds or assets.
Your coins and any traded money or other assets are organized and transacted between peers on the network itself.
The Zutopia marketplace doesn’t act as a holding party in a transaction.
Its goal is to help connect the users of the marketplace, so they can complete the trade themselves.
This is a key differentiating factor and why Zutopia isn’t a cryptocurrency exchange.
It’s a peer-to-peer marketplace, like Ebay or Etsy.
The Australian Government is striving to make digital assets more accessible to the general public.
In this context, the native token Zucoins on the Splitchain network stands out.
From its inception, Zucoins and the Splitchain network have been designed with the user’s experience in mind, while balancing regulatory compliance.
The Zucoins team is, as always, monitoring regulatory landscapes to maintain compliance with what is both in-the-now and coming in the future.
Zucoins and the Splitchain network are well-positioned to align with Australia’s vision for digital assets.
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All the best,
Peter & Rob
MyZucoins
Disclaimer: Of course, this is not advice, financial or otherwise. It’s also important to consider the risks and challenges associated with any potential benefits.