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Australia expects to release a draft legislation which covers licensing and custody rules for crypto asset providers by 2024, and once the legislation becomes law, exchanges will have 12 months to transition to the new regime, Australia’s Treasury announced on Monday.

The timeline indicates it could take until 2025 for an Australian digital asset platform to receive a licence under the freshly proposed regime. Still, the developments represent a significant step taken by Australian government towards framing a crypto regulation policy.

The proposal was expected by mid-2023 after being first announced in February 2023. The delayed October consultation paper is separate from an earlier token mapping consultation paper. Token mapping is the process of identifying the key activities and functions of crypto products and mapping them against existing regulatory frameworks.

The proposal’s publication coincided with a speech by Australia’s Assistant Treasurer and Minister for Financial Services Stephen Jones at The Australian Financial Review Crypto Summit (AFRCM). Details of what the proposal would entail were first reported by AFR.

“Australia has been waiting for certainty over digital asset regulation so it can seek to catch up with the rest of the world,” Michael Bacina, digital asset lawyer at Piper Alderman and Chair of Blockchain Australia told CoinDesk from the Summit. “The approach is consumer-protection centric, with a broad net set to capture many business models not currently regulated. NFT marketplaces holding customer assets could also require licensing.”

The proposal released Monday suggests all crypto exchanges that hold more than AUD 1,500 ($946) of any one client or more than AUD 5 million ($3.15 million) in total assets would require an Australian Financial Services licence, granted by the Australian Securities and Investments Commission. The paper asks questions about 32 themes and seeks written submissions by Dec. 1, 2023.

“Swyftx would like to see a level playing field for national and overseas crypto platforms,” said Adam Percy, General Counsel of Swyftx, a local crypto exchange. “The Government consultation is thoughtful … with appropriate protections and … room for innovation.”

Additionally, the Treasury and Reserve Bank of Australia will publish a “joint report around the middle of 2024 that will provide a stocktake on central bank digital currency (CBDC) research in Australia and set out a roadmap for future work,” said Dr Brad Jones, Assistant Governor (Financial System) at the Reserve Bank of Australia in a speech.

Earlier this year, Australia decided to not make any decision on a CBDC for some years due to several unresolved issues that surfaced at the end of the pilot project.

Edited by Parikshit Mishra.