Australia Introduces Digital Asset Licensing System, Requires Up to AUD 14 Million in Capital

Australia's financial authorities are tightening regulations on digital asset exchanges and tokenized asset custodians. The new measures will strengthen obligations regarding customer asset custody, private key management, and prevention of market manipulation, requiring up to AUD 14 million in net tangible assets depending on the type of business. The Australian Securities and Investments Commission (ASIC) has released consultation paper 392, which outlines the supervisory standards applicable to digital asset platforms, with the new licensing system set to take effect on April 8 next year. ASIC plans to integrate digital asset platforms and tokenized asset custodians into the existing financial services regulatory framework. Affected companies will need to apply for a new Australian financial services license or amend their existing license, and they must also prepare disclosure materials for customers and operational rules for the platform. The regulatory proposal focuses on three areas: customer asset protection, fair trading, and financial soundness. Exchanges will be subject to enhanced standards for customer asset custody and private key management, with strengthened obligations for transaction monitoring and market manipulation prevention. Financial soundness standards will vary based on the services provided, and some businesses may be required to hold up to AUD 14 million in net tangible assets. A transition period has been established for existing operators, and compliant firms can apply for a license by October 7 next year. ASIC will gather feedback from the industry and stakeholders until the 27th of next month, with final guidelines and supervisory standards expected to be announced in March next year.

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