Proposed regulatory changes for Australia’s cryptocurrency industry are unlikely to drive businesses offshore in a “mass exit,” according to legal experts. Instead, the reforms could lead to an increase in applications for financial service licenses and spur growth in the legal field specializing in digital asset regulation.
Jehan-Philippe Wood, a partner at law firm Clyde & Co and head of its digital assets and blockchain team, expressed optimism about the Australian Securities and Investments Commission’s (ASIC) guidance on crypto asset regulation. Released for feedback late last year, the proposals aim to provide clearer regulatory frameworks for businesses operating in the sector.
“Despite initial concerns that the industry may be pushed offshore, I don’t think the latest development should be seen as foreshadowing a mass exit of crypto businesses from Australia,” said Mr. Wood. “It may encourage a large number of new Australian financial service license (AFSL) applications in the near future, which may bring its own issues as it will require the industry, including ASIC, to beef up its resources to cope with the increased activity.”
Boosting Resources for the Crypto Sector
ASIC has acknowledged the potential surge in applications and has assured stakeholders that it is prepared to handle the increased workload. A spokesperson for the regulator confirmed, “We are already seeing more businesses applying for financial service licenses and will continue to engage with stakeholders in 2025 to discuss the needs of the sector.”
The regulator’s plans include a grace period for companies applying for licenses, offering them protection from enforcement action during the application process. Alan Kirkland, ASIC’s commissioner, emphasized the importance of this approach, noting that it encourages compliance while providing businesses time to adapt to the new regulatory landscape.
Industry Reactions
The proposed regulations have been cautiously welcomed by industry players. While some have raised concerns about ASIC’s ability to manage the influx of applications, others see the changes as a step toward legitimizing the sector and fostering consumer trust.
The Albanese government’s broader plans to introduce laws for entities providing access to digital assets align with ASIC’s initiatives. These measures, expected to be finalized by July, aim to create a robust regulatory environment that balances innovation with investor protection.
As Australia moves toward implementing these new crypto regulations, the sector stands at a pivotal moment. With proper resource allocation and stakeholder collaboration, the changes could solidify the nation’s position as a leader in the global digital asset industry.
