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The Financial Planning Association of Australia (FPA) has shown its support for the idea of ​​a "crypto rulebook" and called for exchanges to be regulated instead of crypto assets.

In May, the Australian Law Reform Council (ALRC) proposed to address crypto-regulation through a rulebook-style framework that sets out a series of gradually updated compliance principles for local crypto firms to adhere to.

The submissions were submitted to the Treasury from the FPA's head of policy, strategy and innovation Ben Marshan, who also argued that the regulation of crypto exchanges should fall under the current financial services regime and not a new separate legal framework.

"First, it would create an alternative, duplicative regulatory regime to regulate what is at the heart of buying and holding a financial asset for retail or wholesale investors."

"Secondly, it would require existing financial services licensees to apply for and hold a separate type of licence, increasing costs and duplication of regulation," he added.

Mashan also highlighted the need to introduce more consumer protection for local Australian cryptocurrency users, stressing that regulation of secondary providers (crypto exchanges, brokers, etc.) is the best way to achieve this.

“Regulation of a financial product or service should not depend on the technology underlying the asset,” he said, adding that “it would be virtually impossible to regulate the product because it is so decentralized that it is in all sorts of foreign jurisdictions. .”

Focusing regulation on crypto service providers will take a lot of the "complexity" out of the equation given the rapidly evolving nature of blockchain technology and crypto, Mashan argued, adding that the ALRC's idea of ​​a crypto rule that firms should follow "makes sense."

"It's much easier because instead of people having to wade through thousands of pages of the Corporations Act, they can go to a specific section and it's much more efficient."

Ryan Parsons, co-CEO of local crypto exchange Swyftx, echoed Mashan's calls in an interview with Cointelegraph, noting that his firm wants to soon enact "sensible measures that promote consumer protection" so that Australia does not risk falling behind the United States and the European Union:

"Our preference is for crypto platforms to operate within the existing financial services licensing framework, albeit in a way that takes into account the unique characteristics of digital assets."

“We think this is the best way to reduce complexity and cost, as well as build confidence in crypto as an asset class among Australian investors,” he added.

Another key idea highlighted in the ALRC report was the introduction of the Twin Peaks model of regulation, in which regulation is split between one body tasked with overseeing the maintenance of financial system stability, while the other looks after institutional market conduct and consumer protection.

The same model is used in Australia's financial regulatory system, with the Australian Securities and Investments Commission (ASIC) in charge of good market conduct and consumer protection, while the Australian Prudential Regulation Authority (APRA) is responsible for the stability of the financial system.

Since the Liberal Party was forcefully kicked out of government in May, Australia's cryptocurrency regulatory landscape has become uncertain as the Labor Party appears to have other fish to fry.

At present, Labor is yet to put forward any specific initiatives, but has outlined that introducing greater consumer protections in cryptocurrencies will be a key area of ​​focus.

Source: cointelegraph

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