Australian crypto exchange Swyftx and share trading platform Superhero have abandoned their $1.5 billion planned merger in the wake of government tightening its grip over the crypto industry.
The cancellation comes after the Australian Securities and Investments Commission (ASIC) sued three crypto-related organisations – BlockEarner, BPS Financial, the company behind the ‘qoin’ digital token, and financial product comparison website Finder.com.
This regulatory move is part of the country’s plan to modernise its financial system in the wake of the FTX collapse and other worrying events that have driven authorities and lawmakers into action.
The merger, which was announced in June this year, was heralded as “historic” and would have brought 800,000 customers under one roof.
Moving forward, Superhero founders John Winters and Wayne Baskin and former shareholders will resume control after the buyback from Swyftx.
“Heightened regulatory scrutiny”
In an email to customers retrieved by Cointelegraph, Superhero said that it would not be proceeding with the merger because of heightened regulatory scrutiny of crypto within Australia and across the world
The mail added “As a result of the current environment, we have decided that the best thing for our Superhero customers is to unwind the merger and move forward as a separate, unrelated company.”
The firm also assured users that their funds were safe, as neither their data nor their assets were provided to Swyftx.
The firms first announced the merger in June and revealed plans to enable trading between traditional and digital assets. https://t.co/f9qZlzdSsP
— Cointelegraph (@Cointelegraph) December 21, 2022
Regulatory framework for crypto
In August, Australia's Treasury revealed that it would roll out a token mapping exercise to collate all the digital assets under one regulatory framework.
This exercise aims to outline new rules on digital assets in order to safeguard and educate consumers about extreme market volatility and the possible pitfalls of crypto investments.
Australian Treasurer Jim Chalmers said that the government would consult on matters relating to its ongoing token mapping work before introducing any legislation.
“Our reforms are about starting to fix that in pursuit of a financial system that is stronger and more secure,” he added.
The regulation framework of crypto service providers forms part of an overarching strategic plan for all payments systems across Australia, which is set to be launched in the first quarter of 2023.
Subsequently, the treasury has drafted a consultation paper, which is open to feedback until February 6, 2023.
The consultation paper touches upon various aspects of the crypto ecosystem including digital wallets, stablecoins, crypto assets and central bank digital currencies.