Australian Regulators Endorse Government Plans for Crypto Sector

Australia’s CFR (Council of Financial Regulators) at its latest quarterly meeting endorsed a plan to create a new regulatory framework for crypto-assets.

Earlier this month, treasurer Josh Frydenberg and minister Jane Hume unveiled a plan to reform and modernise Australia’s payments system, including by enhancing oversight and licensing requirements for crypto exchanges and introducing a custody regime for digital assets.

In a statement issued Thursday (16 December), the CFR said it endorsed the terms of reference for a new working group on the regulation of the crypto-ecosystem, which will help to progress some of the crypto-asset reforms.

The CFR also noted that a separate working group will address de-banking in the fintech, crypto-asset and remittance sectors, and the government’s request for advice on the underlying causes and policy responses. This group includes the CFR agencies, along with the ACCC (Australian Competition and Consumer Commission), AUSTRAC and the DHA (Department of Home Affairs).

The CFR agencies include the RBA (Reserve Bank of Australia), APRA (Australian Prudential Regulation Authority), ASIC (Australian Securities and Investments Commission), and the Treasury.

Last month, ASIC chair Joe Longo highlighted in a speech while guidance has been provided on exchange-traded funds linked to crypto-assets, there are no general protections for crypto investors. He also highlighted regulatory challenges associated with DeFi (decentralised finance) platforms – which are also covered under the Treasury’s plans.

In its statement, the CFR also endorsed a new Cyber-attack Communication and Coordination Protocol designed and tested by its Cyber Security Working Group, which will be used to coordinate CFR agencies’ responses to a significant cyber-attack affecting one or many regulated entities. Other cyber-related work planned for the coming year includes completion of the implementation of the threat intelligence based testing framework (CORIE) and a payments contingency exercise.

The CFR also said it supports the work underway by the ASFI (Australian Sustainable Finance Institute) to develop an industry-led taxonomy for sustainable finance, with involvement from regulators, that suits the structure and trajectory of the Australian economy.