In the wake of FTX’s catastrophic failure, the Australian government is advocating for tighter oversight of cryptocurrency platforms to align with regulations governing traditional finance.
A new proposal suggests digital asset companies obtain required licenses and adhere to strict standards around audits and customer asset custody. This aims to prevent issues like improper use of client funds for things like venture investments.
When FTX collapsed in November 2022, its Australian subsidiary held $138 million in assets for nearly 25,000 local consumers. FTX had an Australian Financial Services license that regulators revoked during its descent into bankruptcy.
Founder Sam Bankman-Fried faces criminal charges in the US for allegedly misappropriating billions in customer deposits. He has pleaded not guilty, but FTX’s implosion has prompted calls for stronger crypto platform regulations worldwide.
Australia’s Treasurer affirmed the government is taking a systematic approach to protect consumers while still enabling innovation. The proposed aligned rules match those in other jurisdictions.
By mandating licenses, audits, and asset segregation, Australia hopes to avoid repeats of FTX-like debacles. Tighter oversight aims to ensure client funds are properly custodied and not imperiled by company solvency issues or mismanagement.
