Australia targets crypto, clearing reforms in finance overhaul

The government is also considering cryptocurrency custody and licensing settings to safeguard consumers. PHOTO: REUTERS

SYDNEY – Australia is set to make sweeping changes to financial services laws that will tighten safety nets on the cryptocurrency market and pave the way for possible competition in the clearing of equity trades.

Under considerations outlined on Wednesday, the government will examine which crypto tokens should be covered under finance laws and also seek to strengthen Australia’s payments system. In cash equities, proposed legislation will either allow competition in clearing and settlement if a rival to the Australian Securities Exchange (ASX) emerges, or give regulators more powers in the event of its ongoing dominance.

“The one constant in finance is change. It’s fast-moving, dynamic and our regulatory frameworks haven’t kept up,” Treasurer Jim Chalmers said in the statement.

“Our reforms are about starting to fix that in pursuit of a financial system that is stronger and more secure.”

The government said its consultation paper on Wednesday will form the basis of a new “strategic plan” for the payments system to be passed in the first quarter of 2023, with changes in other areas also expected next year.

Regulators around the world are looking to tighten their grip on digital assets, as the recent bankruptcy of the FTX exchange highlighted a significant lapse of risk controls.

ASX, which has a monopoly on the clearing and settlement of stock trades, is under pressure following its years-long abandonment of an upgrade that was backed by blockchain technology.   

“The digital age has brought new opportunities and risks to finance,” Dr Chalmers said.

“Our plan is about opening up space for further innovation while making sure we have the right regulatory approach in place to keep consumers, businesses and the system safe.” 

The government is also considering cryptocurrency custody and licensing settings to safeguard consumers, and is expected to consult on a framework for that in 2023 before introducing legislation. 

A regulatory framework will be set up for the so-called “buy now, pay later” sector, according to the plans, that will make it easier for companies to ascertain whether or not they require a licence. BLOOMBERG

Join ST's Telegram channel and get the latest breaking news delivered to you.