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.