The IOTA Foundation has called for a balance between innovation and regulation in Web3.
The Foundation gave this disclosure in response to Australia’s proposed Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) reforms. With the new proposal, Australia aims to update outdated rules for the digital age.
IOTA Advocates for Flexible Crypto Regulations
The IOTA Foundation explained in a blog post that it envisages a Web ecosystem where compliance and decentralization thrive together. The Foundation supports Australia’s AML and CTF Act for playing a vital role in protecting financial systems and society.
AUSTRAC, Australia’s AML/CTF regulator and financial intelligence unit, has proposed updates to the AML/CTF Act. According to the IOTA Foundation, these reforms can modernize Australia’s regulatory framework if done properly. The Foundation noted that the proposal aligns with global best practices and makes life easier for innovators working in good faith.
IOTA has advised AUSTRAC to push for harmonized global standards and encourage interoperable solutions to ease international transactions. The organization clamors for flexibility as rigid KYC rules can do more harm than good. It noted that delayed Customer Due Diligence (CDD) with proper post-transaction monitoring is a smart solution.
The IOTA Foundation added that the requirement to designate a dedicated AML/CTF compliance officer could impose an undue burden on smaller entities. Therefore, it noted that options like self-certification or third-party audits could ease the load without compromising compliance.
The AML and CTF measures are also essential for protecting economies, preventing abuse, and maintaining trust in financial systems. The IOTA Foundation, however, pointed out the importance of adequate implementation as the details can make or break innovation.
IOTA believes regulation can empower rather than restrict with risk-based thinking, flexibility, and practical tools. The IOTA Foundation revealed its intention to continue working with regulators to make that vision a reality.
Australia Adopts Pro-Crypto Strategy
The Australian government, led by the center-left Labor Party, recently presented a four-pillared strategy to digital asset regulation. As highlighted in our previous article, the approach encompasses governance standards, licensing for service providers, custody laws, and stablecoin regulations with minimum capital requirements.
Australia’s regulatory strategy aims to integrate digital assets into the existing financial framework, ensuring consumer protection and market integrity. It reflects elements from the EU’s Markets in Crypto-Assets (MiCA) regulation and Singapore’s transparent and innovative framework.
The Australian government focuses on regulating digital assets, aiming for transparency and security in the sector. In a recent update, we covered that the government is working to provide clearer rules rather than creating a crypto reserve. The emphasis is on controlling digital asset platforms to increase their openness and security.
Crypto regulatory reforms have heightened as the government finds the sector more appealing. As outlined in our recent blog post, a study found that 32.5% of Australian citizens hold crypto.