Crypto exchanges beg for regulation as low bar poses investor risk

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The application process for AUSTRAC licensing requires an AML / KYC policy, a pre-made policy that can be easily accessed online, and then an online form.

“The bar is pretty low and anyone can register. We could probably get it all done in a few days on a budget of maybe $ 3,000 or $ 4,000, ”Przelozny said, pointing out that there are hundreds of“ registered exchanges ”that don’t serve any function.

“Nor are there any rules stipulating how assets should be kept. Consumers only hope that custodians will follow a process that will prevent their assets from being lost, but there is no regulator to ensure that this actually happens. “

About one in six, or 17 percent, of Australians own cryptocurrencies, up 12 percent since January, according to a Finder report. Despite wild price fluctuations, retail investors are increasing their exposure not only to Bitcoin, but also to other protocols such as Ether.

The ASIC has been criticized for not being able to better oversee the growing cryptocurrency sector, but pending the development of the legislation, both Australian exchanges said at the hearing on Friday that the regulator could do little to help.

The lack of regulation also exacerbates the “unbanking” problem, where crypto companies do not have access to banking services from major financial institutions.

Swyftx, another digital currency exchange with more than 120 employees based in Brisbane, pointed out that due to the lack of regulation on the safekeeping of crypto assets, Australian banks are reluctant to interact with growing crypto companies.

“We cannot do proper banking and have developed certain things on our platform that are ready to use, but we cannot start them because of the uncertainty,” said Alex Harper, CEO of Swyftx.

“If you talk to two lawyers, you get two different answers because the clarity is not enough and the existing regulation does not properly capture the functionality of these tokens.”

Contrary to Australia’s lax crypto custodian regulation, the Independent Reserve received fundamental approval from the Monetary Authority of Singapore to offer digital payment token services last week.

For the application process with around 170 applicants, the Sydney stock exchange had to prove the robustness of its customer protection mechanisms, transaction checks, IT services, compliance structures and AML / CFT processes.

“There is no such thing in Australia,” said Mr Przelozny.

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