Crypto exchanges in Australia face ASIC licensing – what it means

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Kylie Purcell
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Cryptocurrency exchanges operating in Australia will soon need to hold an Australian Financial Services License (AFSL) to operate legally.

Until now, crypto platforms were only required to be registered with AUSTRAC and comply with anti-money laundering rules.

But according to draft legislation published by the government Thursday, crypto platforms transacting more than $10 million a year and holding over $5,000 per customer, must hold a financial services license under the corporate watchdog ASIC.

An AFSL is basically ASIC's licensing system for financial services providers. It means exchanges will fall under the same legal framework as other financial service providers, with obligations around licensing, governance, and consumer protection.

It'll bring crypto platforms under the same licensing scheme as share trading, forex trading and other investment asset platforms.

When exactly the legislation is due to take effect is still unknown, but it may be as soon as this year.

What happens if you're with an exchange that doesn't have an AFSL?

If you're with an exchange that's currently unlicensed (most aren't), there's no need to panic.

Once the policy takes affect, crypto businesses will have 6 months to start their registration and 12 months to be licensed.

That being said, it doesn't hurt to start exploring alternative options.

Meeting compliance standards set by ASIC in order to be eligible for a license can be extremely costly, especially for smaller businesses.

It's likely that some exchanges will simply close shop in Australia or choose to merge with a platform that already holds a license.

According to Finder research, there's only a handful of crypto businesses that hold an AFSL. These include:

In most cases, these businesses hold an AFSL for specific products, like a credit card, futures or share trading, rather than crypto spot trades.

Still, it may give some idea of the platforms that are already ahead of the curve.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.

Sources

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