New Australian Exchange Licensing Could Stifle Competition

Usha  |  Nov 23, 2021

With the Australian crypto exchange regulation for licensing them, Kraken Australia's Managing Director Jonathon Miller believes that a stringent crypto framework will suppress the local competition over the coming year.

New Australian Regulation for Exchanges Licensing Could Halt Competition

Last month, the Senate Committee on Australia as a Technology and Financial Center, chaired by crypto-friendly Senator Andrew Bragg, released 12 detailed suggestions for regulating the digital asset and Fintech industries. Naming a few, the recommendations included:

  • A new crypto exchange is a licensing regime.
  • New regulations govern decentralized autonomous organizations (DAOs).
  • An overhaul of capital gains tax in decentralized finance (DeFi).
  • Miller told in an exclusive interview that it was "still to be seen" if the new laws will have a favorable or bad impact on the local economy in the future, saying that:

     "We've seen other markets where onerous regulatory regimes have come in, and you know, you see a collapse of competition, a collapse of the vibrancy that we've got today in Australia."

     He also added, there is a need to meet strict "capital adequacy, auditing, and responsible person" under the proposed market licenses for Australia ( DEC). Later on, he also drew comparisons with Japan and pointed out the limited number of options that negatively impact the local consumer because of the government's strict licensing requirements. 

    The incoming crypto regime will "enhance and enable innovation; Caroline Bowler.

    Whereas Caroline Bowler, the CEO of local crypto exchange BTC Markets, had a different take. According to him, the incoming crypto regime in Australia will "enhance and enable innovation." She stated that the "single biggest roadblock" for the firm looking for wide opportunities for compliant services and products last year was the lack of crypto-focused regulation in Australia:

    "That was causing issues across the business and issues for us to expand and issues for our clients and causing a hesitancy amongst people coming in.

    We couldn't offer the full range of what we wanted to offer." Adrian Przelozny, the CEO of Australian and Singapore-based crypto exchange Independent Reserve (IR) shares a similar opinion to Bowler, noting that the "upside of regulation far outweighs any risks."

     "I can tell you that being in a licensed jurisdiction is much better than being in an unlicensed jurisdiction. And this is because it changes the conversations that we have with the partners that we get to work with."

    Przelozony stated that the "biggest challenge" for Australia's crypto firms is securing good banking relations, with de-banking being a vital issue in the local crypto climate.

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