Australia to develop regulatory framework for blockchain and cryptocurrencies

The Australian Prudential Regulation Authority (APRA) will tighten the regulatory framework in response to new business models focused on digital assets, the Financial Review reports.

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The initiative, added to the body’s priorities for this year, aims to safeguard financial stability and support innovation.

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APRA is working closely with other members of the Regulators’ Council and with international partners. The latter are currently preparing, among other things, a set of rules for handling digital assets with respect to banks.

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The document references the Basel Committee on Banking Supervision’s “technologically neutral approach”. It proposes applying the same capital and liquidity requirements to digital assets, provided they present the same risk as traditional assets.

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The regulator pledged to simplify prudential frameworks for small firms, “reducing the burden where possible, without compromising safety”.

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APRA acknowledged that blockchain adoption for digitising operations could improve regulation. To implement this approach, consultative groups will be formed to study the potential of solutions for “suptech” (pension tech) and “regtech” (regulatory technology).

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Earlier in October 2021, the Australian Securities and Investments Commission published a set of requirements for crypto-based ETP seeking admission to trading on stock exchanges.

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Earlier, the local blockchain association called on authorities to create a ‘safe harbour’ for digital assets.

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