Australia’s crypto industry is worried after the country’s securities regulator signaled an expansion of its power.
ASIC said it considers many crypto assets as financial products, adding a regulatory burden that may spur companies to move elsewhere.
Australia’s crypto industry is concerned companies may flee the country after the nation’s securities regulator set off “the crypto fire alarm,” by saying it considers most crypto assets to be financial products in what some observers interpreted as an expansion of its powers, experts told CoinDesk on Wednesday.
Symbolically, a real fire alarm sounded – unnecessarily, it transpired – at a crypto summit hosted by the Australian Financial Review (AFR) shortly after the comment by the Australian Securities and Investment Commission’s (ASIC) Alan Kirkland.
He had told what the AFR called a hostile crowd at Monday’s event that ASIC thinks “many widely traded crypto assets are a financial product.” Many, therefore, are likely to need a license under current laws.
Kirkland’s comments raised concerns the regulator is tightening its oversight and is likely to impose onerous conditions that could drive companies offshore.
ASIC is adopting “a more stringent approach” and businesses are “feeling uncertain,” which could drive them to explore opportunities abroad, Amy-Rose Goodey, the managing director of the Digital Economy Council of Australia told CoinDesk
The comments “should prompt urgent industry consultation with policymakers” said Michael Bacina, a partner at law firm Piper Alderman. “If ASIC maintains their regulation by enforcement approach … then ASIC will be taking a path the U.S. SEC took years ago. Having the courts set the regulatory perimeter is highly inefficient for both the regulator and the industry.“
ASIC has already resorted to court action against crypto companies, including one dismissed case against Finder Wallet.
That company’s founder, Fred Schebesta, was on the stage straight after Kirkland’s comments when the fire alarm went off, AFR reported. The irony was clear.
Schebesta told the audience that Kirkland’s approach was like giving “the Wright Brothers a fine because they didn’t have a pilot’s licence,” according to AFR. He later told CoinDesk: “The laws need to be updated to provide certainty” as even “the ongoing maintenance and compliance post-licensing can be quite burdensome.”
According to Kate Cooper, Australia CEO and head of APAC for Zodia Custody, said many crypto companies “are finding the status quo in Australia untenable, and are planning on seeking career or business opportunities in jurisdictions where regulation is much clearer like Dubai and Singapore.”
ASIC’s approach highlights the gray area in the country’s crypto regulation, with draft legislation that was announced in 2023 still not enacted.
“There still remain many grey areas in regulation of crypto, especially with further delay to the introduction of the new regulation which is not expected until mid 2025 at the earliest,” Cooper said in a WhatsApp message.
Andrew Charlton, a member of parliament representing the government who was also at the event was unable to say whether the bill would appear before the next federal election. One is expected next year, but a date has not been set.
ASIC did not respond to a CoinDesk request for comment before publication.