It cannot be overstated just how important crypto exchanges are to the industry; they are the platforms through which most people buy and sell their tokens. So, they are one of the first to reflect the state of the industry.
But crypto exchanges often face roadblocks in different countries because of local regulations and attitudes. Take Australia, where several crypto exchanges are struggling to operate. There is the Australian arm of the infamous FTX exchange which has had its license revoked by regulators.
This comes as its parent company and several members of its top leadership are facing charges in court. But it’s not just scandal-ridden platforms that are feeling the brunt of this. Just recently, the National Australian Bank announced several measures that it says are aimed at protecting customers. Part of this includes a block on “some cryptocurrency platforms” which they say will reduce instances of people being scammed.
Crypto lovers reading between the lines have deduced that this will include crypto platforms and this further adds to their anxiety. This is especially considering the fact that several Australian banks are giving crypto exchanges the same treatment and this could have far-reaching consequences.
It has already been acknowledged, even by regulators in Australia, that its crypto regulation needs to be improved. This was the logic behind the token-mapping exercise that the Australian Treasury took part in earlier this year and has become a hot-button issue within the country.
But the recent institutional pushback against exchanges might be counterproductive to this goal. As previously stated, crypto exchanges are a major pillar of the industry and refusing them licenses and access to banking services in a bid to crack down on scams might do more harm than good.
On the one hand, the Australian government wants to better regulate cryptocurrency. But even if the tokens are better regulated, Australians will not be able to easily access them if exchanges are subject to such harsh regulations. And while there is always the need to be concerned about people falling for crypto investment scams, there are many other uses that Australians have for cryptocurrency.
For example, many more businesses are accepting cryptocurrency as a means of payment for goods and services. There is also the use of cryptocurrency for gambling purposes. A look at the comparison of sites in Australia will show that cryptocurrency is a popular choice for gambling games. We also need to consider the fact that some Australians, and immigrant workers in Australia will use cryptocurrency to send money abroad and to hedge against inflation.
But all these can only be done if they can get their hands on cryptocurrency and the most common way this is done is through crypto exchanges. If this trend of crypto exchanges being restricted by institutional bodies in Australia continues, it could, at best, inconvenience consumers who will have to go elsewhere to buy and sell crypto.
At worst, it risks sabotaging the ongoing work of crypto regulation in the country.
