Crypto Exchanges Call For Regulation As Low Bar Poses Risk For Investors

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The AUSTRAC license application process requires an AML / KYC policy, a pre-written policy that can be easily obtained online, and then an online form.

The bar is quite low and anyone can register. We could probably do it all in a few days on a budget of around $ 3,000 or $ 4,000, Przelozny said, noting that there are hundreds of registered exchanges that do not serve any function.

There are also no rules that prescribe how assets are to be stored. Consumers are simply hoping that custodians follow a process that prevents the loss of their assets, but no regulator guarantees that this actually happens.

About one in six Australians, or 17%, owns a cryptocurrency, a 12% increase since January, according to a Finder report. Despite wild price swings, retail investors are increasing their exposure, not only to bitcoin, but to other protocols such as Ether.

Criticism has been leveled at ASIC for not monitoring the growing cryptocurrency industry better, but until legislation is worked out, both Australian exchanges at Friday’s hearing said that the regulator could provide little help.

The lack of regulation also compounds the unbanking problem, whereby crypto firms cannot access banking services provided by large financial institutions.

Swyftx, another Brisbane-based digital bureau de change with more than 120 employees, pointed out that the failure of crypto asset custody regulations means Australian banks are reluctant to interact with growing crypto companies.

We can’t get proper banking services and we’ve built some things within our platform that are ready to go, but we can’t get them started due to the uncertainty, said Alex Harper, Managing Director by Swyftx.

If you talk to two lawyers you get two different answers because there is not enough clarity and the existing regulations do not properly capture how these tokens actually work.

Unlike Australia’s lax crypto depository regulations, last week Independent Reserve received in-principle approval from the Monetary Authority of Singapore to offer digital payment token services.

The application process, which had around 170 applicants, required the Sydney-based exchange to display the robustness of its mechanisms for client protection, transaction screening, IT services, compliance structures and AML / CFT processes.

In Australia, nothing like that, Mr Przelozny said.

The Committee on Australia as a Technology and Financial Center is chaired by Liberal Senator Andrew Bragg and is due to deliver a final report in October.

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