Australian Securities Commission to regulate cryptocurrency markets

Australian Securities and Investments Commission (ASIC) says it will treat cryptocurrency trading markets like other securities market in future and will introduce relevant regulation to govern the markets. To that end, the commission is planning to introduce rules and strict mechanisms targeted at containing illegal activities in cryptocurrency markets.

This is according to a corporate plan report recently released by the agency, detailing their corporate plan for the period 2018–22.

The report says that the growth of digital environment and structural changes in financial services offers a potential source for harm to customers and investors and says it would monitor emerging products such as ICOs and cryptocurrency in order to deal with potential harms.

Recognizing the potential of blockchain and distributed ledger technology (DLT), the commission says companies in blockchain and distributed ledger technology (DLT) could bring significant change and boost the country's economy and the broader fintech market, which attracted an investment of over $675 million in 2018.

Australia has itself seen increase in blockchain-based business activity. For instance, the World Bank, which wants to use blockchain to protect funds against corrupt intermediaries, chose Commonwealth Bank of Australia to conduct bond transactions through a distributed ledger. Additionally, the Commonwealth Bank of Australia (CBA) collaborated with five logistics organizations to successfully use Ethereum blockchain in July, and completed a cross-border shipment of almonds. The system utilized IoT sensors and blockchain to verify authenticity and track goods from source to delivery point.
Further, the Australian Securities Exchange (ASX) is set to replace its Clearing House Electronic Sub-register System (CHESS) with a DLT (Distributed Ledger Technology) solution by 2021.

ASIC said in the report that it will introduce a regulated "market infrastructure” that is specific to cryptocurrency markets.For instance, the commission may form a body that would list crypto projects and that would also supervise all market operators, settlement providers and derivative trading.

The commission says in the report that it would also move to settle disputes between crypto exchanges and investors in these markets in cases of behavior that is contrary to current market practices or which may cause hard to consumers and investors. In other words, the commission will seek to mitigate harm to consumers, investors and markets by focusing efforts on monitoring emerging products, ICOs and intervening when there is poor behavior and potential harm to consumers and investors.

ASIC says they have formed internal cross-team working groups in order to coordinate work across the organization in implementation of the new approaches. The commission staff has also been visiting financial institutions to study their policies and approaches towards big data, blockchain, artificial intelligence and cryptocurrencies and other emerging technologies.

The agency will also collaborate with ACCC and RBA to monitor implementation of CHESS replacement with a with a DLT (Distributed Ledger Technology) solution.