427 registered crypto exchanges in Australia. Let that number sink in. It’s almost twice the amount of suburbs in their competitors Melbourne! Does that sound right to you? Does it feel right? So it sure doesn’t compute for me. Even as someone who has lived, eaten and breathed in the world of blockchain for several years, I can’t help but hear alarm bells ringing all around.
Too Many Exchanges, Not Enough Oversight?
We all want assurances that the Wild West days of crypto are (supposedly) behind us. Regulatory pressures are increasing, and governments are belatedly beginning to understand the scope and disruptive power of digital assets. But are we really keeping up? AUSTRAC’s recent cautionary notice to dormant Digital Currency Exchanges (DCEs) should be a red light district warning. It's like discovering a huge pile of expired food in your pantry – you know something's rotten, and you're probably not going to eat anything until you've cleaned it all out.
AUSTRAC is right to be concerned. Brendan Thomas, AUSTRAC's CEO, gets it. An inaccurate register is a danger zone. Are stern warnings enough? Are we going to be banking on the goodwill of fly by night operators not to take advantage of this? You remember those terribly risky actors, right? They first cracked into crypto to avoid the constraints of traditional finance.
Unfortunately, the high number of registered exchanges further contributes to a perfect storm for regulatory arbitrage. To further muddy the water, many of these exchanges are probably dead, too. Think of it like this: imagine trying to police a city where half the buildings are abandoned. That is because those criminals would use those abandoned buildings allowing for easy, hidden criminal operation. These dormant exchanges quickly become targets, or worse, shells, prime for exploitation by money launderers, scam artists, and just about every other digital ne’er-do-well.
For the average Aussie investor? All of a sudden, a whole new generation of mums and dads are getting their first introduction to crypto, lured in by the concept of making a lot of money quickly. For them, if they see a registered exchange, they think it must be safe, regulated, and above board. AUSTRAC's planned public register is a step in the right direction, but it's not a silver bullet. Will consumers really look at the register before spending their hard-earned dollars? Or will they rely on the first result Google gives them and gamble on it being decent?
Here’s where the “unintended consequences” narrative really falls apart. By permitting so many of these exchanges that could eventually shut down to stay registered, we’re perpetuating a dangerous illusion. It would be akin to installing a “security camera in use” sign when the camera is actually a fake. Sure, it will scare off some petty pickpockets, but it won’t slow down an enterprising criminal.
Consumer Confidence, or False Security?
What’s the risk when a sleeping exchange is suddenly awakened by the wrong actors in the market? So what are the implications when innocent users deposit money into a defunct exchange? Only then do they understand that their funds have disappeared into the crypto black hole. This aren't hypothetical scenarios. This is fear in action.
This isn’t just some sop to protect the rich crypto whales. It’s about the principle of protecting everyday Australians from being fleeced. Please join us in making for an honest and open crypto marketplace. It doesn’t have to be a rigged game where the house always wins.
AUSTRAC has the power to cancel registrations, and it is high time they flex their muscles to do so. A regulatory spring clean is overdue. We need to make it a practice to prune the list of currently registered exchanges. Let’s cut the dead wood, dump the delinquent, and prune the perilous.
Time for a Regulatory Spring Clean
It's not just about enforcement. We must consider the accessibility. Barriers to entry are real. Are Australia’s crypto exchange registration rules too lax? Are the ongoing compliance requirements stringent enough? Is it time to raise the floor? This would have the effect of preventing all but the most serious, well-financed, and reputable players from entering the market.
Look, I'm not anti-crypto. Far from it. I, for one, share their deep faith in the transformative power of blockchain technology. I believe in responsible regulation. We must balance the imperative to foster innovation with our duty to protect consumers. We need to create a regulatory environment that encourages legitimate businesses to thrive while deterring criminals from exploiting the system.
AUSTRAC’s recent crackdown on crypto ATMs is a positive first step. It’s only part of the solution. What we don’t need is a shortsighted, piecemeal, and reactionary approach to crypto regulation. Any new approach should focus on the deeper causes of the issue, not just the symptoms.
Today there are 427 affected exchanges in the state with a population of just over 26 million. As you might imagine, this environment is completely untenable. Frankly, it’s a regulatory black hole that is poised to eat up naive investors alive. It's time to shine a light on this issue and demand action before it's too late. Are you with me to fight for it?
The current situation – 427 registered exchanges in a country with a population of just over 26 million – is simply unsustainable. It's a regulatory black hole waiting to swallow unsuspecting investors whole. It's time to shine a light on this issue and demand action before it's too late. Are you ready to demand it with me?
