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Swyftx has strongly endorsed the Australian Government’s proposed approach to regulating cryptocurrency in its response to a Treasury consultation on digital assets.
Australia’s top-rated exchange said national proposals to enhance consumer protections would ‘all but eliminate’ the risk of another FTX-style collapse and ensure Australia is competitive in the global digital assets sector.
Treasury released its consultation on the regulation of digital asset platforms in October. The proposal paper recommended bringing national cryptoasset exchanges under the existing Australian Financial Services licencing regime.
In its formal submission sent to the Treasury, Brisbane-based broker Swyftx welcomed the Proposal paper and praised its technology neutral approach. The Swyftx submission says:
“Swyftx has long advocated for the sector to be regulated under the existing Australian Financial Services Licence framework. We believe the proposed approach to regulating digital asset facilities would all but eliminate the risk of a major FTX-style collapse occurring in Australia.”
“We strongly endorse enhanced rules around governance, custody, capital adequacy and disclosure, and wholeheartedly agree with Treasury on the requirement for appropriate consumer protections.”
“We believe bringing crypto under the AFSL regime supports the principle of regulating on the nature of a risk rather than the type of institution.”
The Swyftx consultation response makes a number of recommendations to Government, including a proposal to broaden the definition of financial advice to allow financial planners to advise on digital assets like Bitcoin and Ethereum.
Jason Titman, Chief Operating Officer at Swyftx, said: “There is significant unmet demand for personal advice on cryptocurrency and we only expect this to increase with large investment firms like BlackRock working to bring Bitcoin ETFs to the market.”
“A few large exchanges like Swyftx provide educational material on digital assets. This is important because it improves general understanding of the market and its opportunities and risks. But it doesn’t address the crypto advice gap or give local investors the accessible, personal investment advice they need.”
“Professional financial advice is absolutely essential to supporting informed, risk-based investment decisions in the digital asset market.”
Financial planners in the country are currently only able to provide advice on products that are licenced under an Australian Financial Service licence.
Swyftx’s submission to the Treasury has recommended that the legal definition of financial advice is broadened to include ‘financialised functions’. A move that would allow financial planners to advise on digital assets and open-up access to professional indemnity insurance.
Other recommendations in the Swyftx response include a proposal to enshrine into legislation, the Proposal paper’s objective of ensuring: ‘a balanced approach to risk mitigation, consumer protection and innovation’.
The Swyftx submission argues that this would create greater certainty for the industry and reduce the risk of costly court actions to test the law. It says:
“It is critical that Australia is explicit about the kind of digital asset ecosystem it wants to support. It has become fashionable over the past two years for jurisdictions to want to claim leadership status in the race to regulate digital assets, in order to be perceived as an attractive destination for Web3 business investment.”
“While this can certainly be true, it is also true that the regulatory settings ultimately adopted determine what kind of ‘crypto hub’ a jurisdiction will or will not be.”
“We think this overarching objective should be expressly enshrined in the forthcoming legislation, so that it is clear what Parliament’s intention was when enacting the laws that will regulate the digital asset industry, and from which all associated regulation and interpretive guidance will flow.”
Titman welcomed the Proposal paper and its ‘common-sense’ approach and urged Treasury to make any final legislation as detailed as possible. He said: “The idea of leaving it to courts to establish much of the law, will lead to unnecessary uncertainty and a less competitive environment for the growth of the digital asset industry.
“The Government Proposal positions Australia to be a leader on cryptocurrency regulation,” he said. “There doesn’t need to be a trade-off. Domestic regulation can protect Australians and at the same time support Australia’s international competitiveness. The proposed approach to regulation achieves exactly that.”
Swyftx, which has around 700,000 customers across the ANZ region, submitted its consultation response to Treasury on Friday, December 1. The formal closing date for submissions.
The full consultation response from Swyftx will be published on the Treasury website along with other submissions.
For media enquiries, please contact Swyftx Head of Communications, Tom Matthews, at: [email protected]