Australia’s finance watchdog to crack down on dormant crypto exchanges

Australia’s financial intelligence agency has told inactive registered crypto exchanges to withdraw their registrations or risk having them canceled over fears that the dormant firms could be used for scams.

There are currently 427 crypto exchanges registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC), but the agency said on April 29 that it suspects a significant number are inactive and possibly vulnerable to being bought and co-opted by criminals.

The agency is contacting any so-called digital currency exchanges (DCEs) that appear to no longer be trading, and AUSTRAC CEO Brendan Thomas said they’ll be told to “use it or lose it.”

“Businesses registered with AUSTRAC are required to keep their details up to date; this includes details about services that are no longer provided,” he added.

Businesses wanting to offer Australians conversions between cash and crypto, including crypto ATM providers, must first register with AUSTRAC, which monitors for crimes including money laundering, terror financing and tax evasion.

The agency can cancel a registration if it has reasonable grounds to believe the business is no longer active or offering crypto-related services.

Ten firms have had their AUSTRAC registration canceled since 2019, with the most recent being FTX Express in June 2024, the local subsidiary of the collapsed crypto exchange FTX.

Following its blitz on inactive crypto exchanges, AUSTRAC said it will publish a list of registered exchanges to help Australians verify legitimate providers.

Thomas said the goal is to make it harder for criminals to scam people and improve the integrity and accuracy of AUSTRAC's register.

“If a DCE does intend to offer a service, they need to contact us otherwise we will cancel the registration and this information will be added to the register,” he said.

“Members of the public should feel confident that they can identify legitimate cryptocurrency providers that are registered and subject to regulatory oversight and that we are driving criminals out of this industry,” Thomas added. 

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In February, the Anti-Money Laundering regulator took action against 13 remittance service providers and crypto exchanges, with over 50 others still being investigated regarding possible compliance issues.

Six providers were refused registration renewal on the grounds that key personnel were either convicted, prosecuted, or charged with a serious offense.

Australia has yet to pass crypto regulations. In August 2022, the ruling center-left Labor Party initiated a series of industry consultations to draft a crypto regulatory framework.

In March, the government proposed a new crypto framework regulating exchanges under existing financial services laws ahead of a federal election slated for May 3.

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