The Australian government said on Monday it plans to protect people from cryptocurrency collapses by forcing the platforms to get a financial services license.
In a proposal paper, the Treasury said that any crypto exchange or digital asset platform with more than Aus$5 million (US$3.2 million) in aggregate assets would have to comply.
It added that nearly one in four Australians own some cryptocurrency.
Cryptocurrencies such as Bitcoin rely on decentralized cryptography to ensure transactions rather than the traditional banking system.
The Treasury said, “Collapses of digital asset platforms, both locally and globally, have seen Australians lose their assets or be forced to wait their turn amongst long lines of creditors.”
It added, “These reforms seek to reduce the risk of these collapses happening, by lifting the standard of their operations and increasing their oversight.”
The government asked for feedback on its proposal by December 1, with further consultation due in 2024 on the proposed legislation.
If they are needed to get a license, digital asset platforms would be governed by Australian financial services law.
The regulation includes minimum solvency and cash reserve requirements and the need to be efficient, honest, and fair, keep records, and handle conflicts of interest.
The platforms would also be subject to specific standards governing their holding and transacting in cryptocurrencies.
