Australia is the following jurisdiction to suggest regulation of digital property. On 16 October 2023, the Treasury launched a session paper in search of business suggestions on a proposal to control digital asset platforms via the present Australian Monetary Companies Licence (AFSL) regime. Australia follows the footsteps of the EU, UK, Canada, Hong Kong and Singapore.
Learn extra: Crypto regulation coming to Australia
Session is open till 1 December 2023.
What’s the proposal?
Sure asset holding preparations shall be regulated, requiring platform suppliers (e.g. exchanges and custodians) and different intermediaries performing monetary providers in relation to digital asset services (e.g. brokers, arrangers, brokers, market makers, and advisers) to carry an AFSL. An individual who carries on a ‘monetary providers enterprise’ in Australia should maintain an AFSL beneath the Companies Act 2001 (Cth) overlaying the supply of the monetary providers (until an exemption applies).
What’s the present regime?
Presently, an AFSL is required provided that the underlying product is a monetary product. A monetary product features a product whereby an individual makes an funding or manages monetary threat. Nonetheless, there may be lack of readability as to when a digital asset product may turn out to be a monetary product.
What does this imply for insurance coverage?
The proposal is a pivot from Australia’s earlier proposal to create a separate licensing regime for crypto asset service suppliers. Many business individuals commented the beforehand proposed regime would have led to confusion available in the market and unresolved interactions between the 2 regimes the place suppliers have been confronted twin regulation.
For insurers within the monetary strains house, the AFSL regime is acquainted floor with quite a few insurers having first hand expertise to exposures on this house. AFSL holders should have ‘enough’ skilled indemnity insurance coverage however it’s not clear whether or not this could lengthen to digital asset suppliers. From a coverage perspective, having enough compensation preparations in case issues go unsuitable is unquestionably fascinating.
What subsequent?
Session is open till 1 December 2023. Learn the proposal right here.
Disclaimer: This text supplies basic data solely and doesn’t represent authorized, monetary or different skilled recommendation. It doesn’t handle the circumstances of any specific particular person or entity. You need to search your personal skilled recommendation.