AUSTRAC Consultation

The Australian Bitcoin Industry Body (ABIB) members have actively participated in providing feedback to AUSTRAC on its draft guidance for Australian Financial Institutions concerning customers in higher-risk sectors. ABIB’s feedback aims to ensure that regulations strike a balance between preventing financial crimes and fostering innovation in the growing digital asset space.

Key Areas of Feedback:

• Risk Differentiation Between Bitcoin and Other Cryptocurrencies: ABIB emphasizes that Bitcoin’s decentralised nature reduces risks compared to other cryptocurrencies, which may be more prone to manipulation and centralization risks. Therefore, ABIB advocates for a clear distinction in risk profiles when assessing Bitcoin-only businesses versus broader cryptocurrency sectors.
• Proportionality in AML/CTF Compliance: ABIB members stress the importance of proportional regulatory measures. While anti-money laundering (AML) and counter-terrorism financing (CTF) efforts are vital, over-regulation of Bitcoin-only businesses, particularly non-custodial platforms, could hinder innovation without significantly improving risk management.
• Focus on Self-Custody and Transparency: ABIB encourages AUSTRAC to consider that many Bitcoin businesses promote self-custody solutions, where customers control their own assets, significantly reducing the risk associated with custody by third-party service providers. These businesses should be recognized as lower-risk entities compared to custodial services.
• Avoiding “One-Size-Fits-All” Approaches: ABIB highlights the need for flexible regulatory frameworks that account for the operational differences between Bitcoin-only exchanges, non-custodial platforms, and broader crypto asset service providers. A uniform approach may inadvertently stifle legitimate businesses while failing to address sector-specific risks effectively.

Through its engagement with AUSTRAC, ABIB aims to ensure that Australian financial institutions are better equipped to accurately assess and manage risks associated with the Bitcoin industry, while also fostering a supportive environment for responsible innovation.