The global cryptocurrency landscape continues to evolve rapidly, and Australia is no exception. As regulatory frameworks take shape across the Asia-Pacific region, one of the world’s leading digital asset exchanges, Coinbase, has voiced growing concerns over what it describes as “ongoing regulation by enforcement” in Australia. While the company acknowledges constructive dialogue with regulators, it warns that aggressive enforcement actions—without clear legislative guidance—could hinder innovation and consumer confidence.
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Regulatory Uncertainty Amid Expected Draft Legislation
Australia’s Treasury has announced plans to introduce draft legislation for the crypto sector by the end of 2024, aiming to establish a formal licensing regime and custody rules for crypto asset service providers. This upcoming framework is expected to bring much-needed clarity to an industry that has operated in a gray regulatory zone for years.
John O’Loghlen, Managing Director for Asia-Pacific at Coinbase, emphasized the importance of avoiding regulatory overreach through enforcement actions before the draft legislation is finalized. “We want to avoid ongoing regulation through enforcement,” O’Loghlen told CoinDesk, noting that recent interactions with Australian regulators have been “healthy” and collaborative—unlike previous years marked by ambiguity and tension.
He added: “There’s clearly a nice macro theme and ongoing uptick in consumer adoption with the recent approvals of spot-ETF products in Australia and the U.S.” These developments signal growing institutional acceptance, and Coinbase wants to ensure that premature enforcement doesn’t cloud this positive momentum.
ASIC's Enforcement Approach Raises Industry Concerns
Despite Treasury’s forward-looking plans, the Australian Securities and Investments Commission (ASIC) has maintained an aggressive stance toward crypto businesses. Last month, Dr. Rhys Bollen, ASIC’s senior executive leader for digital assets, warned industry participants to align their operations with precedents set in recent enforcement cases.
This approach—what many in the industry refer to as “regulation by enforcement”—involves using litigation and penalties to define regulatory expectations rather than establishing clear rules upfront. Critics argue this creates uncertainty and deters innovation.
ASIC has already taken legal action against major players like Binance Australia and eToro. Meanwhile, several Australian banks have imposed partial restrictions on crypto transactions, citing fraud risks. Some court rulings, however, have gone in favor of crypto firms—such as Block Earner and BPS Financial Pty Ltd.—where ASIC was criticized for misleading public statements and even ordered to pay legal costs.
O’Loghlen acknowledged these tensions but also highlighted improvements within ASIC’s outreach efforts. “We’ve been quite vocal with our concerns about ASIC potentially just continuing to make enforcements,” he said, referencing multiple roundtable discussions held in recent weeks. Still, he praised a new ASIC team for proactively engaging with over 50 industry groups—sometimes even over informal “coffee conversations.”
Building Trust Through Policy Leadership
In a strategic move to strengthen its regulatory engagement, Coinbase recently hired David Menz as its APAC Policy Manager. Menz brings deep experience from senior roles at both ASIC and the Australian Treasury’s Digital Assets and Crypto Unit—giving him unique insight into policymaking and enforcement dynamics.
“Our current policy priority is to continue to foster those relationships with both ASIC as well as Treasury,” Menz said. “We will be putting a large amount of effort into that response to exposure draft legislation when it does come out.”
Menz expressed hope that the upcoming legislation will go beyond a minimal licensing structure. “We would hope it's not just a bare bones licensing framework,” he noted, adding that while even basic rules are better than none, the industry needs detailed, forward-thinking regulation.
One key area of focus: staking services. Coinbase supports including staking under a formal Australian Financial Services (AFS) license but insists that no licensed entity should stake customer assets without explicit consent. “We would encourage that sort of good detail to be included in the exposure draft legislation,” Menz said.
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FAQs: Understanding Crypto Regulation in Australia
What does 'regulation by enforcement' mean?
Regulation by enforcement refers to regulators using lawsuits, penalties, or public warnings to set compliance standards instead of issuing clear laws or guidelines beforehand. This can create uncertainty for businesses trying to operate legally.
When is Australia’s crypto draft legislation expected?
The Australian Treasury aims to release draft legislation by the end of 2024. It will cover licensing, custody rules, and potentially stablecoin regulations.
Is Coinbase expanding in Australia?
While Coinbase hasn’t announced new market entry plans, it is actively engaging with regulators and hiring local policy experts—signaling long-term interest in the Australian market.
What is an AFS license?
An Australian Financial Services (AFS) license permits firms to provide financial services, including investment advice and dealing in financial products. Coinbase advocates for crypto businesses to operate under this recognized framework.
How are spot crypto ETFs influencing regulation?
The approval of spot Bitcoin ETFs in Australia and the U.S. reflects growing regulatory acceptance of crypto assets as legitimate investment vehicles, increasing pressure for clear, supportive frameworks.
Why is staking regulation important?
Staking allows users to earn rewards by participating in blockchain networks. Regulating it ensures consumer protection—especially around consent, transparency, and asset custody—without stifling innovation.
The Path Forward: Clarity, Collaboration, and Consumer Protection
As Australia moves toward comprehensive crypto legislation, the balance between enforcement and collaboration will be critical. While ASIC plays an essential role in protecting consumers, overreliance on litigation risks discouraging responsible innovation.
Coinbase’s dual emphasis on proactive dialogue and detailed policy input reflects a broader industry desire: clear rules that protect users while enabling growth. With experienced figures like Menz now shaping policy strategy, and positive signals from Treasury, there’s cautious optimism that Australia can build a balanced, modern regulatory environment.
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The coming months will be pivotal. As the exposure draft takes shape, stakeholders across government, finance, and technology must work together to ensure Australia doesn’t fall behind in the global race to regulate digital assets responsibly—and fairly.