October 18: Exchanges May Need an AFSL
ADVISORAdvisor CryptocurrencyAdvertiser DisclosureCrypto News: Australia Moves On RegulationPatrick McGimpseyContributorPublished: Oct 18, 2023, 1:00pmEditorial note: Forbes Advisor Australia may earn revenue from this story in the manner disclosed here. Read our advice disclaimer here.Crypto News: Australia Moves On RegulationTable of ContentsIn an era of global economic turbulence—characterised by high interest rates, persistent inflation, and increasingly wary investors—the digital landscape of Australia is undergoing its own transformation. Last week, the Australian Treasury charted its path to better regulate the digital asset space, presenting an outlook that doesn’t dive into the multitudes of tokens but zeroes in on a keystone component: the exchanges.Featured Partner Offer1eToroOwn CryptoOn eToro’s WebsiteInvest with a crypto brand trusted by millionsBuy and sell 70+ cryptoassets on a secure, easy-to-use platformCrypto assets are unregulated & highly speculative. No consumer protection. Capital at risk.October 18: Exchanges May Need an AFSLThe Australian Treasury recently shared its Regulating Digital Asset Platforms paper, which you can read here. It suggests that crypto exchanges with larger holdings should require a AFSL from the Australian Securities and Investment Commission (ASIC). Specifically, the Treasury’s proposal will affect those exchanges holding more than $3.2 million or those where an individual’s stake is more than $946.This move aims to strike a balance: keep people using these platforms safe while not stifling the booming crypto industry in Australia. And with the rapid growth of cryptocurrency in recent years—it is estimated that around 25% of us own some form of cryptocurrency—such a balanced approach is crucial.Coinbase, a leading exchange, weighed in on the topic. A spokesperson said: “We are heartened by the Australian Treasury’s proactive steps in launching a crypto licensing framework, a move that simultaneously offers protection to consumers and fosters innovation. At Coinbase, we built our foundation on compliance, trust, and credibility. We see progress toward regulatory clarity as a reaffirmation of our commitment to Australia and to the expansion of the global crypto ecosystem.”However, challenges remain. One thorny issue is banking. Many licensed crypto outfits in Australia find partnering with banks tricky. Some of Australia’s Big Four banks have imposed restrictions on crypto-related transactions and have even outright banned transacting with certain exchanges. And while the Treasury’s paper is a start, it doesn’t dive deep into this banking puzzle.But it’s early days yet. The Treasury is welcoming feedback on their paper until December 1, 2023. This means there’s still a chance to refine things and ensure Australia’s crypto regulations are world-class.Coinbase’s spokesperson expressed optimism about this dialogue, noting: “As the consultative phase commences, we are poised to continue to engage constructively with both the Treasury and our industry contemporaries. Recognising Australia’s legacy in technological advancements, particularly in fintech and cloud domains, we are optimistic that these forward-thinking crypto regulations will sculpt a pathway for Australia to emerge as a frontrunner in the crypto and web3 arenas.”For Australians, especially those considering diving into crypto investments, understanding these regulatory changes is vital. Clear regulations can mean better protection for investors. Plus, it can help Australia carve a niche in the global crypto scene, attracting new businesses and fostering innovation.In a world where the financial landscape is rapidly evolving, Australia’s proactive stance on crypto regulation stands out. It signals the nation’s commitment to merging modern financial solutions with traditional safeguards. Furthermore, with countries like the US, UK, and parts of the European Union undergoing crypto regulatory shifts, Australia’s move could serve as a benchmark for others. As 2024 approaches, the nation’s crypto community and investors alike will watch closely, hoping for a regulatory framework that benefits all.
October 12: Meanwhile, Coinbase Holds Firm Against SEC
The investment world has been chaotic this week, with geopolitical unrest affecting prices across many markets. The crypto market wasn’t spared from the turmoil, but there was some promising news regarding blockchain adoption, which has been hidden among more pressing news matters.Starting with the geopolitical scene, the Hamas attack in Israeli has undeniably cast its shadow on global financial markets. Bitcoin, generally a leading indicator for the crypto market, has dwindled, signalling broader uncertainty in the digital asset market. Its fall to around $US27,000 has been symptomatic of more significant shifts. More often than not, investors retreat to time-tested assets like gold and oil as geopolitical tensions swell. These commodities have experienced a surge this week, demonstrating how real-world conflicts can tip the scales in financial markets.However, while geopolitical events have influenced the movement of investor funds, a significant portion of this week’s crypto spotlight is stolen by a momentous regulatory showdown in the US: the Coinbase saga.Coinbase, a titan in the world of crypto exchanges, has been embroiled in a legal tussle with the US Securities and Exchange Commission (SEC) since June this year over allegations of operating as an unregistered exchange. This clash isn’t an isolated dispute—there are other ongoing lawsuits against multiple players in the industry—however, the Coinbase case has garnered most of the attention. The SEC move against Coinbase potentially indicates how digital assets might be regarded under US law in the future. Given its timing, the development underscores a pivotal moment in the ongoing quest to define and regulate the crypto industry.This week, several legal experts and authorities have echoed the SEC’s perspective, suggesting that cryptocurrencies shouldn’t dodge traditional rules despite being a new asset class. This week, the North American Securities Administrators Association (NASAA) bolstered this view, emphasising that many digital assets might not hold intrinsic economic value beyond sheer speculation.Countering this, Coinbase, has held firmly to the notion that the SEC might be overstepping its boundaries. They advocate for the uniqueness of cryptocurrencies and the need for a fresh regulatory lens to regulate this new asset class.The significance of this week’s Coinbase story for Australian investors and the global community lies in its potential ripple effect. The outcome of this legal battle could have significant knock-on effects on the regulatory stance adopted by Australia and other countries worldwide.Luckily, it’s not all doom and gloom for crypto investors; there is some positive news from the past week. JPMorgan, a leading financial services firm and US banking giant, made headlines by executing a successful live blockchain-based transaction. Partnering with financial behemoths like BlackRock and Barclays, the transaction involved tokenising shares in one of its money market funds. They’ve showcased the symbiotic potential between age-old banking and novel blockchain technology by tokenising a traditional financial asset.And, of course, no week in crypto is complete without its share of personal opinions. Former hedge fund manager and host of CNBC’s Mad Money, Jim Cramer, continued his recent bearish stance on crypto, saying, “Mr. Bitcoin is about to go down big”. While some might take his view seriously, many crypto investors find themselves taking the opposite bet as historically, some of Cramer’s bearish calls have, in fact, been the best time to buy. However, this past week of global chaos suggests that investors should be wary of making any investment decisions amid such economic and geopolitical uncertainty. For most investors, staying on top of the news and keeping emotions at bay when managing investments is the key to staying afloat during these tumultuous times.
October 6: Why Is Bitcoin Down This Week?
It’s been a challenging week in the world of money markets, and if you’re wondering why your Bitcoin portfolio has taken a dip, you’re not alone. Understanding Bitcoin’s ties to broader market dynamics and specific events can offer clarity as investor money ebbs and flows between different markets. Delving into this week’s events, from surging bond yields to regulatory wins, provides a clearer picture for cryptocurrency enthusiasts and any Australian investor looking to keep an eye on their investments. Let’s break it down.This week, Bitcoin experienced a noticeable pullback from its recent highs, retreating from the $US28,000 mark before stabilising around $US27,600. This downtrend wasn’t exclusive to Bitcoin; other prominent cryptocurrencies like Ethereum and Solana’s SOL faced similar, albeit minor, declines. In contrast, the Avalanche token, AVAX, bucked the trend. Prominent figures on the ‘X’ platform (formerly Twitter) spotlighting a new application on the Avalanche blockchain, AVAX, prompted a surge in interest and value.XRP also witnessed an uptick in its valuation, primarily driven by two significant events. Firstly, the US SEC’s unsuccessful bid to appeal in the Ripple case instilled confidence among XRP investors. Secondly, Ripple’s Singapore arm obtaining clearance to extend its payment services in the Asian region further buoyed its associated token, XRP.However, the broader crypto regulatory outlook is still marked by uncertainty. The SEC’s proactive stance is evident in their ongoing legal challenges against industry powerhouses Binance and Coinbase. These investigations, targeting pivotal players, underscore the crypto world’s volatile regulatory environment right now and emphasise the pressing need for well-defined frameworks.Turning our attention to traditional financial markets, US Treasury bond yields have seen a significant increase. For those unfamiliar, these yields play a pivotal role in determining where investors put their money. When such yields surge, as they recently have to levels unprecedented in 16 years, traditional and more stable assets like US Treasury bonds become increasingly appealing. This diverts investment away from riskier assets, including cryptocurrencies like Bitcoin. This redirection of capital and heightened caution in the market has a knock-on effect on the valuation of digital assets.Crypto is not the only market affected either. Stocks are also feeling the pain, with the S&P 500 dropping to levels reminiscent of June’s dip, influenced by these surging bond yields. This traditional market instability can sway investor sentiment and decisions, further influencing crypto valuations.In line with this, the ASX200, a key benchmark for Australian stocks, hasn’t been spared either, sinking nearly 2% over the past week. This dip in a significant index like the ASX200 is a testament to the broader volatility currently prevalent in the markets, impacting both traditional and digital assets alike.For Australian investors, Bitcoin’s performance this week culminates in shifts seen in traditional markets. The rise in bond yields and their impact on the flow of investor money, combined with the overarching shadow of regulatory challenges, underscores the need for continuous vigilance in this dynamic investment environment.
September 28: SEC Tight-Lipped on Spot Bitcoin ETFs
Bitcoin has taken a tumble this week, and the prevailing theme in crypto news at the moment is the undeniable influence of developments in the US. The US continues to cast a significant shadow, with Bitcoin’s price fluctuations and suspenseful regulatory decisions serving as a reminder to Australian investors that it’s as important as ever to stay on top of overseas developments. This week, uncertainty surrounding the US Securities and Exchange Commission’s (SEC) approach to crypto regulation, coupled with Bitcoin’s unpredictable nature, has heightened interest and emphasised the US’s crucial role in determining the future of digital assets. Bitcoin, which was set to retake the $US27,000 level just last week, slid back towards $US26,000 this week. The fluctuation was largely a result of a slide in the value of both the S&P 500 and Nasdaq, which are both down 0.6% this week after the US 10-year Treasury yield hit a 16-year high of 4.63%. This is a big deal, as it hints at the expectation of increased inflation and a possible tightening of monetary policy. The cost of oil has also hit a yearly high, fuelling inflationary concerns and driving the continued trend of rising interest rates. A 0.6% weekly dip for the S&P 500 and Nasdaq might not sound significant, but it forms part of a larger trend, with both markets falling around 10% since the start of August. In contrast, Australia’s ASX200, while not immune, has shown some resilience, experiencing a 6% decrease over the same period.Despite the price drop, some argue that the conventional relationship between interest rates and the negative flow-on effect for Bitcoin is undergoing a transformation. The next Bitcoin halving event in April next year has many crypto commentators wondering whether Bitcoin’s four-year boom-and-bust cycles will continue independently of the US Fed’s monetary movements, even if interest rates remain high. On the regulatory front, the SEC is keeping the crypto community on edge. The regulator has been notably tight-lipped about their stance on spot Bitcoin ETFs, adding a layer of uncertainty for potential investors. In a Congressional hearing this week, SEC Chair Gary Gensler continued his critical stance on crypto companies, emphasising his concerns over managing customer assets and accusing the industry of dangerous practices.Gensler’s critique has sparked a dialogue in Congress, with discussions revealing a partisan divide between Republicans and Democrats on the SEC’s approach to digital assets. Amid this regulatory ambivalence, the SEC has begun consideration of a spot Bitcoin ETF application from Franklin Templeton and delayed decisions on spot Ether ETFs filings from ARK Invest and VanEck. Bitcoin ETF applications from BlackRock, Ark and WisdomTree remain pending.With deadlines extended and decisions still looming, the wait for the green light continues. The looming government shutdown has further complicated matters, leading to anticipated delays in the SEC’s reviews and approvals.This landscape of fluctuating crypto prices, rising interest rates, and regulatory uncertainty presents a complicated scenario for Australian investors to digest. It underscores the importance of staying informed and vigilant in the ever-changing crypto environment. Navigating these events requires a keen eye on global macroeconomic events and a clear understanding of the ongoing developments in the crypto and regulatory landscapes.
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