Ripple hosts Australia policy summit on blockchain regulation

Ripple, the provider of enterprise blockchain and cryptocurrency services, has held its inaugural Australia policy summit in Sydney. The closed-door event, which took place on 20 March 2024, focussed on the regulatory frameworks surrounding blockchain and digital assets. This landmark discussion brought together nearly 200 global and local policymakers, regulators, and industry leaders to delve into regulatory developments in both Australia and around the world.

The summit's highlight was Greg Medcraft's keynote address, delivered by a former ASIC chairman who now serves as the co-chair and board member of Global Digital Finance. This was followed by panel discussions featuring industry experts, including former US Department of Justice prosecutors, members of the legal community, banks, and industry bodies.

Among the major talking points at the Summit was the Treasury's proposal paper on the regulation of digital asset platforms. Released in late 2023, it suggested that digital assets should fall under the existing Australian Financial Services Licence (AFSL) framework, regulated by the Australian Securities and Investments Commission (ASIC). It is anticipated that exposure draft legislation will be released later this year.

Representatives from the industry were encouraged to prepare for these impending changes by reviewing their compliance with current ASIC guidelines on risk management, conflicts of interest, and potential exceptions. By understanding their current compliance status, they are believed to be better equipped to roll out their products and services under the new regulations.

The summit also emphasised that organisations should not wait for the new rules to be implemented before initiating capital raising or hiring efforts. They were reminded to find the right balance between keeping up with user protection protocols and encouraging innovation. It was identified this necessitates further clarity in regard to custody and taxonomy, two areas that could otherwise risk creating confusion in the market.

As per Rahul Advani, Senior Policy Director, APAC at Ripple, the recent policy-related changes indicate that the Exposure Draft legislation for regulating digital asset platforms will be released this year. However, this has raised some questions, especially regarding the necessity for entities with an AFSL licence to obtain a new licence for digital asset facilities. He highlighted that it is Ripple's belief that these entities should not need a new licence for digital asset platforms.

Advani further discussed the proposed thresholds by the Treasury for platform providers to be exempt from holding an AFSL licence. Pending the purpose is to promote innovation; he expressed concern that this could be a blunt tool leading to undesirable cliff-edge effects and low uptake rates. With regard to the proposed 12-month transition period for industry participants to comply with and obtain a licence, Advani suggested an exemption regime to avoid service disruptions until the AFSL licence is granted.

The Ripple Australia Policy Summit provided a pivotal platform for policymakers, regulators and industry leaders to engage in high-level discussions on key issues affecting the sector. With the proposed regulatory changes, the industry can expect several developments in the near future.