Australian Crypto Exchanges Looking to Introduce more Regulation to Trading in Digital Assets

With prices falling and the assets straddling the lines between new technology and traditional finance, 2018 has been a difficult year for the crypto market. Business Insider spoke with senior staff from two of the most significant Australian crypto exchanges and with the corporate regulator ASIC on September 13, 2018, to find out more about the challenges the industry faces.

Australian Crypto Exchanges Thriving

Jordan Michaelides — head of institutional investment at Coinjar — told Business Insider that trading volumes reached $1.4 billion in the first half of 2018.

This data seems to be in line with the rest of the world, where activity among crypto exchanges also appears to be ramping up. For example, the U.S.-based Gemini exchange, owned by the Winklevoss twins, announced plans on September 10 to launch a regulatorily approved cryptocurrency that’s pegged to the U.S. dollar.

The day-to-day increase in trading volume that these exchanges have seen in 2018 led many of them to advocate for a more comprehensive regulatory framework. According to the Business Insider report, more regulation would lend more legitimacy to the asset class, attracting funds that otherwise couldn’t justify risking capital by investing in crypto assets.

Coinjar, along with the Sydney-based exchange Independent Reserve, is just one example of how a crypto exchange caught the interest of established players in venture capital.

Coinjar counts VC fund Blackbird Ventures as an investor, while Independent Reserve sold a 25 percent interest to a group led by KTM Ventures Innovation Fund earlier this year, the report said.

However, despite the data showing a significant increase in trading volume, most regulatory bodies, especially in Australia, are still skeptical of many of the claims coming from the industry. A spokesperson for corporate regulator ASIC was circumspect on how much volume is moving through marketplaces.

“Tracking the actual industry is even newer than the sector itself,” they told Business Insider when asked about Coinjar’s claim that it has seen $1.4 billion in trading volumes, adding that such aspects of the volume of transactions can be quite opaque.

In addition to ASIC, the Australian crypto market is also being monitored by AUSTRAC, the federal government’s financial intelligence agency.

Crypto Execs Say Australia Will Have to Look up to the U.S.

Many crypto exchanges have lobbied the US Securities & Exchange Commission (SEC) to approve a Bitcoin ETF through 2018, which led many local exchanges to hope for an ETF approval in Australia.

The local exchange operators Business Insider spoke to said that they hope a crypto-linked product which trades on a regulated securities exchange will provide a vehicle to attract larger capital flows. The report stated that they were optimistic that ETFs will eventually be available, but said that Australia would probably have to follow the lead from Wall Street.

However, Michaelides and Adrian Przelozny, CEO of Independent Reserve, both agree that the crypto ecosystem would benefit more from smaller projects than from an ETF approval. Michaelides cited the example of Bitpay, a global bitcoin payment service headquartered in Atlanta.

“I think smaller products will be better than something like an ETF. Not necessarily in terms of boosting the price of Bitcoin, but just expanding the industry.”