Cryptocurrency exchange Kraken is calling on Australia to clarify its cryptocurrency regulations following the Federal Court’s ruling that part of its margin extension product breached local laws. The move has once again stirred debates about how rules guiding the Australian crypto space need to be better defined.
Court Ruling Creates Regulatory Uncertainty
In a statement published Sept. 8, Kraken said it was disappointed by the judgment given by the court. It further expressed that the current regulatory climate has left both investors and businesses ‘in a state of limbo.’ The exchange said the ruling underlines broader issues with how the country has handled the regulation of cryptocurrencies.
This is an untenably unsatisfactory state of affairs for the Australian crypto industry,” Kraken said. “The judgment makes it clearer than ever that bespoke crypto regulation is urgently needed.”
Legal Action by ASIC Against Kraken Subsidiary
Today’s legal action flowed from an ASIC matter filed in September 2023 against Kraken’s subsidiary Bit Trade. The corporate regulator alleged Bit Trade had breached the law by failing to make a proper target market determination before offering its margin trading product. A Federal Court judgement in late August went against Bit Trade, with ASIC’s Deputy Chair Sarah Court saying the case sets a precedent for future crypto compliance enforcement in Australia.
Impact on Kraken’s Operations in Australia
This judgment means Kraken’s fiat margin trading, for instance, is now available only to wholesale clients in the country. In the same breath, the exchange was keen to note that crypto margin trading services weren’t impacted. Kraken also acknowledged the steps taken by Australia towards establishing a full regulatory regime for digital assets and also warned: “The tendency of parliaments to wind down work prior to elections, combined with federal election timing, makes the end of 2024 the likely earliest that the legislation would be passed”.
This Federal Court ruling essentially restarted the debate on regulatory reform, with Kraken at the forefront, calling for more detailed guidelines on the industry that would give clarity on compliance-related issues to enable regulators to support, not hinder, the crypto market in Australia.
Conclusion: A Call for Urgent Reform
The Federal Court case ramifications have set in motion a much-needed call for clear, broader crypto regulations within Australia. The crypto business is growing, and stakeholders like Kraken want bespoke legislation that will protect the consumer and allow businesses to operate within clear legal perimeters.
