The Federal Court ruled against Kraken subsidiary Bit Trade in late August.
Following a Federal Court decision against its fiat margin trading product, cryptocurrency exchange Kraken has expressed concerns about the absence of regulatory clarity in Australia.
In a recent blog post, Kraken said that Australian crypto businesses and investors continue to operate in a “confusing and uncertain regulatory environment.”
The exchange stressed that the court’s ruling highlights the more general problem of unclear regulations in the nation’s cryptocurrency policy.
“This ruling makes it clearer than ever that bespoke crypto regulation is urgently needed.”
ASIC Scores Win Against Kraken
ASIC (Australian Securities and Investments Commission) brought civil lawsuits against Bit Trade, a division of Payward Incorporated, the parent company of Kraken, last year.
Bit Trade was accused by ASIC of not complying with legal requirements, including determining the target market before making its margin trading product available to customers.
The regulator also emphasized that Bit Trade’s product broke rules by acting as a credit facility because it gave Australians access to a five-fold credit extension of the asset’s value.
In late August, Bit Trade lost a case in Federal Court.
The platform has violated the nation’s Corporations Act section s994B(2) since October 2021, the court ruled in its decision.
This will “ensure they comply with regulatory obligations in order to protect consumers,” according to Sarah Court, deputy chair of ASIC.
“It is a legal requirement for financial products to be distributed to consumers appropriately. Consumers should receive the full protection of the law when dealing in crypto-asset products.”
COURT SLAMS KRAKEN’S BIT TRADE FOR COMPLIANCE FAIL
— IBC Group Official (@ibcgroupio) August 23, 2024
An Australian court hit Kraken’s Aussie branch, Bit Trade, with a compliance ruling.
The ruling sided with ASIC, saying Bit Trade missed the mark on design and distribution rules and operated as an unlicensed credit facility.… pic.twitter.com/JtHjxbCAS0
Kraken’s crypto margin trading services are unaffected, but its fiat margin trading services are now only available to wholesale clients in Australia.
In 2020, Kraken crypto exchange acquired Bit Trade to offer crypto offer digital asset services in Australia.
Australia’s Crypto Market Sees Continued Growth
Over the past few years, Australia’s cryptocurrency market has experienced significant growth in terms of adoption and ownership.
According to reports, Australia has a higher rate of cryptocurrency ownership (17%) than the global average (15%).
It is important to note that Australia has been looking more closely at cryptocurrencies.
The cryptocurrency exchange Binance Australia informed users in May of last year that a decision made by a third-party service provider would prevent them from making deposits or withdrawals in Australian dollars.
Even Binance Australia’s offices were searched in July by Australian Securities and Investments Commission (ASIC) officials.
The Australian government also unveiled a proposal in October that would have subjected digital asset platforms to the same legal framework as other providers of financial services.