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Friday, March 22, 2024

ASIC Commissioner Unveils Strategy To Tackle Blockchain’s Regulatory Trilemma

  • ASIC Commissioner, Alan Kirkland, has outlined the regulator’s planned approach to tackle crypto’s “regulatory trilemma”.
  • Kirkland said balancing the competing demands of innovation, investor protections and market integrity was important for any future regulation of crypto markets.
  • Establishing clear and enforceable rules is a priority, however Kirkland also said ASIC wasn’t afraid to take enforcement actions despite current lack of legal clarity.

Australian Securities and Investments Commission (ASIC) Commissioner, Alan Kirkland, delivered a speech ↗ at Blockchain APAC’s Policy Week in Sydney on Wednesday in which he outlined the regulator’s planned approach to cryptocurrency markets.

Related: CoinGecko Research Report Crowns Solana as Best Blockchain of 2024 ↗

Kirkland said that ASIC’s approach will seek to balance the competing demands of what is sometimes referred to as blockchain’s ‘regulatory trilemma’—investor protections, market integrity and financial innovation—while aiming to achieve positive outcomes for all market participants. The Commissioner also emphasised that trust is fundamental to the proper functioning of financial markets and proper regulation is an important part of establishing trust.

ASIC Wants Clear, Enforceable Rules For Crypto

Recently the Australian Government has been making progress towards establishing a legal framework for parts of the crypto industry. Last October the government released its proposal paper ↗ for the regulation of digital asset platforms and in December released its consultation paper ↗ on the regulation of payment providers, which included the regulation of stablecoins. 

Speaking about what ASIC would like to see come out of this work, Kirkland said establishing clear, enforceable rules was key: 

In short, our desired outcome is a clear set of rules that maintain market integrity and mitigate the risks to consumers and investors – backed by mechanisms that promote compliance with these rules and enable us to enforce them effectively.

Alan Kirkland, ASIC Commissioner

Kirkland also referenced the International Organization of Securities Commissions (IOSCO) ‘Policy Recommendations for Crypto and Digital Assets Markets’ report ↗ released last November, which recommended a “same activity, same risk, same regulatory outcome” approach to crypto. 

He confirmed that—as a member of IOSCO—ASIC agrees with this recommendation to essentially regulate the crypto market in the same way traditional markets have been regulated where possible. 

ASIC Prepared To Enforce Rules Despite Lack Of Clarity

Despite the current lack of clarity around crypto regulation in Australia, Kirkland said ASIC is still prepared to take enforcement actions against businesses or individuals it believes to be acting outside the rules:

We are not afraid to pursue cases where the law might be considered unclear. In our legislative and judicial system, the courts are the ultimate arbiter of these matters. This approach applies to all sectors under our regulatory remit – and is no different for crypto.

Alan Kirkland, ASIC Commissioner

In terms of the regulator’s general approach to enforcement, Kirkland said ASIC takes a strategic approach, targeting cases with the highest potential for serious harm and the cases most likely to have a strong deterrent effect within the industry.

Related: Spot ETF Buying Slows As Bitcoin Slides Into Danger Zone ↗

He closed his speech by saying he understands the value of innovative financial products enabled by crypto, but reiterated the need to balance that innovation with strong regulation:

We acknowledge the potential benefits of novel financial products and services, or new ways of offering existing products and services – as long as they are developed and distributed with appropriate regard for consumers, investors, and market integrity.

Alan Kirkland, ASIC Commissioner

Kaylie Pferten
Kaylie Pferten
A pilot of submersible crafts in a former life, now married to my husband David and writing about investment advice.

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