The Australian Prudential Regulation Authority (APRA) set out initial risk management expectations for regulated entities dealing with crypto assets on Thursday, as well as a policy roadmap to introduce further standards over the next three years.
in a letter from APRA President Wayne Byres, the authority that oversees banking, insurance and pension institutions in Australia, emphasized the need for due diligence and risk assessments when it comes to crypto assets.
Its roadmap revealed plans to introduce operational risk standards by 2024 and, tentatively, crypto asset requirements and stored value facility standards by 2025.
He also reported that he would be looking at “possible approaches for the prudential regulation of payment stablecoins, among others.”
Crypto has been growing in popularity in Australia. According to the Australian Taxation Office, more than 800,000 Australian taxpayers transacted digital assets in the last three years, an increase of 63% in 2021 over the previous year. Surveys from other companies, such as comparison site Finder, give estimates of the proportion of Australians holding crypto as high as 18%.
Regulatory moves are increasing as more companies and products enter the market. FTX announced plans to enter Australia last month, and last week The Block reported that four ETF issuers have agreed to cover margin requirements to list new crypto-related products on Cboe Australia.
Embracing the blockchain
Traditional financial institutions and government agencies have also embraced blockchain technology.
Earlier this year, three of the country’s top four banks began issuing digital bank guarantees for retail property leases, according to the Treasury, while the country’s main clearinghouse, ASX, also replaced its Electronic Subregistration System for the Clearing House with distributed accounting technology.
In August last year, the Australian Border Force managed concluded a trial use of blockchain to digitize business processes with partners in Singapore.
But APRA was not the only government body to make crypto announcements today. The Australian Transaction Reporting and Analysis Center (AUSTRAC), the country’s financial intelligence agency responsible for monitoring financial transactions linked to crime, also published guidelines on the prevention of criminal abuse of digital currencies.
An industry consultation is also underway at the Treasury regarding the regulation of “crypto asset secondary service providers” such as exchanges. The paperpublished on March 21, suggests that regulators are leaning towards creating new frameworks for cryptocurrencies rather than bringing them under existing regulations.
However, the failure of previous attempts to regulate exchanges remains significant in Australia. Melbourne-based exchange ACX.io suspended withdrawals in 2021 before going into administration the following year. The fact that the company was a member of Blockchain Australia and had a digital currency license issued by AUSTRAC did not prevent investors from losing approximately A$10 million.
“Many commentators have asked us to fit cryptocurrencies into the financial product regime. But crypto assets do not require the government to ensure trust in the same way that financial products do…The Morrison government wants to make sure that consumers can trust the exchanges they use to buy crypto,” the minister for finance said. retirement, financial services and digital technology. economics, jane hume, saying last month at the Australian Blockchain Week 2022.
“The Government will not protect consumers from market volatility. But Australian investors will be confident that if they use a licensed Australian exchange, they can trust that exchange to honor its commitments to its clients and have the right protections in place.”
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