Australia’s top financial regulator, the Prudential Risk Authority, or APRA, today (April 21) set a 2025 target to implement regulations governing cryptocurrencies.

“While activities associated with crypto assets are still relatively limited in Australia, the potential scale and risks of such activities could become significant over time,” said one policy roadmap issued by the states of authority.

Rules will be developed to establish cryptocurrency guidelines for all regulated financial entities, the document states.

The roadmap anticipates that the activities that will face new regulation will include: “investment in crypto assets, loans linked to crypto assets, issuance of crypto assets and provision of services associated with crypto assets for clients.”

For financial institutions, the document states, the risks of interacting with cryptocurrencies could include operational risk, investment risk, and credit risk.

Specific caveats include: “ADIs and insurers investing in crypto assets will need to ensure they have an adequate level of regulatory capital and account for any exposures in their ICAAP process and stress tests where appropriate. When a crypto asset is defined as an asset intangible under relevant accounting standards, should be deducted from Common Equity Tier 1.”

The roadmap also states that CSR licensees considering investing in cryptocurrencies must be able to demonstrate that their investment strategy is consistent with their duty to act in the best financial interests of their beneficiaries and meets existing requirements for prudential governance. of investments.

The document further states: “There are a variety of other risks to consider, including implications for liquidity management, market risk management, and measurement of large exposures. Regulated entities should also consider disclosure requirements.”

APRA offered immediate guidance for engaging in cryptocurrency-related business, including for organizations to conduct proper due diligence before cryptocurrency transactions and “apply robust risk management tools.”

The document indicates that the new scrutiny will extend to businesses related to stablecoins, cryptocurrencies whose value is linked to certain assets.

In the US, the regulation of cryptocurrency investments faces a number of thorny issues. Among them is the lack of transparency in tax matters.

Learn more: Taxes may be a bigger problem in crypto regulation than anticipated