The Australian Prudential Regulatory Authority has outlined a strategy for developing regulations to oversee the digital asset industry and manage associated risks.
Australian Prudential Regulation Authority (APRA) Chairman Wayne Byres sent a letter to the entities regulated by the agency. The letter outlines the steps APRA intends to take to mitigate new risks associated with the industry’s rapid growth. APRA suggested that before providing services to companies operating in this sector, organizations conduct their due diligence and comprehensive risk assessment.
Companies dealing with crypto assets are expected to follow the principles of a prudential standard similar to those that apply to providers of traditional financial services. APRA will discuss this issue in detail with the Basel Committee, and then hold additional consultations on the regulation of cryptocurrencies in 2023.
Regarding operational risks, APRA stated the need to review the current requirements for organizations using cryptocurrencies and develop new rules for them. The draft prudential standard will be presented in mid-2022, and local and international regulators will take part in its development.
The agency also mentioned stablecoins, considering that the mechanism for their regulation is similar to the regulation of storage services (Stored-value Facilities, SVF). A roadmap for the development of crypto-currency regulations to be followed by APRA-controlled entities will be implemented by 2025.
“APRA will continue to closely monitor industry trends and the risks associated with cryptocurrencies. Therefore, we will interact with local and international regulators and provide additional recommendations as necessary,” Byres said in a letter.
Earlier, the agency stated that it would not restrict the development of the cryptocurrency industry, but warned financial institutions about the risks of trading crypto assets. In 2020, APRA began developing a regulatory framework regarding the oversight of cryptocurrency wallets.
