Cryptocurrency exchange Kraken has raised concerns about the lack of regulatory clarity in Australia following a Federal Court ruling against its fiat margin trading product.
In a recent blog post, Kraken said that Australian crypto businesses and investors continue to operate in a “confusing and uncertain regulatory environment.”
The exchange emphasized that the court’s decision underscores the broader issue of regulatory ambiguity in the country’s approach to cryptocurrency.
“This ruling makes it clearer than ever that bespoke crypto regulation is urgently needed.”
ASIC Scores Win Against Kraken
Last year, the Australian Securities and Investments Commission (ASIC) filed civil proceedings against Bit Trade, a subsidiary of Kraken’s parent company, Payward Incorporated.
ASIC accused Bit Trade of failing to meet legal requirements, such as conducting a target market determination, before offering its margin trading product to customers.
The regulator also stressed that since Bit Trade’s product allowed Australians to receive an extension of 5x credit of the asset’s value, it violated regulations by operating as a credit facility.
The Federal Court ruled against Bit Trade in late August.
In its ruling, the court said the platform has breached the country’s Corporations Act section s994B(2) since October 2021.
ASIC Deputy Chair Sarah Court noted that this would “ensure they comply with regulatory obligations in order to protect consumers.”
“It is a legal requirement for financial products to be distributed to consumers appropriately. Consumers should receive the full protection of the law when dealing in crypto-asset products.”
COURT SLAMS KRAKEN’S BIT TRADE FOR COMPLIANCE FAIL
An Australian court hit Kraken’s Aussie branch, Bit Trade, with a compliance ruling.
The ruling sided with ASIC, saying Bit Trade missed the mark on design and distribution rules and operated as an unlicensed credit facility.… pic.twitter.com/JtHjxbCAS0— IBC Group Official (@ibcgroupio) August 23, 2024
As a result, Kraken’s fiat margin trading services in Australia are now limited to wholesale clients, though its crypto margin trading services remain unaffected.
In 2020, Kraken crypto exchange acquired Bit Trade to offer crypto offer digital asset services in Australia.
Australia’s Crypto Market Sees Continued Growth
The crypto market in Australia has seen significant growth over the past few years in terms of ownership and adoption.
As reported, the crypto ownership rate in Australia is 17%, which is higher than the global average of 15%.
It is worth noting that crypto has been under increasing scrutiny in Australia.
In May last year, cryptocurrency exchange Binance Australia told customers they would lose access to Australian dollar deposits and withdrawals due to a decision by its third-party service provider.
In July, officials from the Australian Securities and Investments Commission (ASIC) even conducted searches at Binance Australia‘s offices.
In October, the Australian government also unveiled a proposal intended to subject digital asset platforms to the same laws that govern other financial services providers.
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