Australian Regulators Seek Crypto Regulation By 2025

The Australian Prudential Regulation Authority (APRA) has published a policy roadmap for adopting crypto asset regulation for financial institutions.

According to a policy statement released a few days ago, Australia’s top financial regulator has set an interim target for 2025 to make the framework practical.

For this, the APRA intends to hold discussions in 2023 on the standards for the financial treatment of crypto assets.

The inclusion of stablecoins within the existing framework for “store value facilities” is also being examined, a broad phrase for any non-cash facility where users pay money up front for future redemption.

According to the ‘Crypto Assets: Risk Management Expectations and Policy Roadmap‘, “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.”

The roadmap anticipates that “investment in crypto assets, loans linked to crypto assets, issuance of crypto assets, and provision of services associated with crypto assets to customers” will be subject to the new legislation.

The study adds that the dangers of working with cryptocurrencies could include operational risk, investment risk, and credit risk for financial institutions.

The regulator outlined its expectations for how companies manage risk related to crypto assets, directing them to implement comprehensive risk management procedures with clear responsibilities and relevant reporting, among other things.

Before engaging in cryptoactive activities, entities must conduct a full risk assessment and have measures in place to manage the risks associated with doing so.

The letter also indicates that companies dealing in stablecoins (cryptocurrencies whose value is tied to specific assets) will be subject to increased scrutiny.

APRA’s announcement comes as a crypto investment in Australia picks up steam. 21Shares, an issuer of exchange-traded funds (ETFs), revealed a few days ago that two-point ETF will launch in the next few days, one investing directly in Bitcoin and the other in Ether.

According to a study by comparison site Discoverer last year, Australians were among the most ardent cryptocurrency enthusiasts, with 18.3 percent owning some. Compared to a world average of 14.6 percent, this is a significant number.