The Australian Senate's Committee on Economic Legislation is currently reviewing a new bill that would mandate cryptocurrency exchanges and tokenization platforms to operate within the country's existing financial services regulatory framework.
This move aims to learn from past failures of prominent platforms like FTX, preventing similar crises involving platforms that hold customer assets in custody.
To comply with the new framework, relevant platforms will need to meet custody and settlement standards set by the Australian Securities and Investments Commission (ASIC), provide tailored disclosures to retail clients, and adhere to platform-specific conduct and governance rules. However, smaller service providers with annual transaction volumes below AUD 10 million (approximately USD 7 million) will be granted exemptions.
Market Participants Urge Caution
Nevertheless, some industry insiders are concerned that overly broad definitions of "digital token" and "control in fact" tests within the bill could inadvertently bring wallet software and infrastructure providers under regulatory scrutiny.
US blockchain firm Ripple Labs supports using "control" as an "appropriate nexus" for defining regulatory scope but emphasizes the need for adjustments to better accommodate modern security architectures like multi-party computation (MPC) wallets.
The company further warned that under a strict interpretation of the "control in fact" test, technology providers holding only a single key shard in an MPC setup could be mistakenly classified as regulated custodians, despite lacking the ability to independently move customer assets.
The committee has acknowledged these concerns but leans towards the Treasury's recommendation to refine the scope of regulation through future specific regulations rather than directly amending the bill's core definitions.