Joseph Longo, the chairman of the Australian Securities and Investments Fee (ASIC) is looking for a regulatory loophole to be closed that allowed FTX to accumulate an Australian Monetary Providers License (AFSL) within the nation with out the total suite of checks.

In line with a Dec. 5 report from the Australian Monetary Evaluation, Longo made the feedback whereas talking at a joint parliament committee on firms and monetary providers on Monday native time.

A significant matter the committee dug into was after all the current FTX and Alameda Analysis meltdown led by the now-troubled founder Sam Bankman-Fried.

Longo defended his regulatory physique when being grilled on how, and why the regulator let FTX purchase an AFSL beneath its watch, explaining {that a} regulatory loophole prevented ASIC from intervening or conducting the correct checks.

FTX was reportedly in a position to bypass the common course of for acquiring an AFSL when it took over IFS Markets in Dec. 2021, which successfully gave it entry to its license. FTX Australia later started working in Mar. 2022.

Longo stated this loophole gives ASIC with no authorized grounding to analyze firms in the identical method that new licensees are scrutinized.

FTX “purchased [its AFSL] off an present license-holder. Beneath present statutory preparations, it’s a regular factor to do,” Longo stated, including: “we have been notified about that place, however it is rather straightforward to commerce another person’s license.”

Longo additionally added that ASIC had particularly requested the previous authorities led by Scott Morrison to plug this regulatory hole, however the challenge was finally left unaddressed.

Because it stands, ASIC is barely in a position to look at an organization again to entrance when it is making use of for a brand new AFSL, and subsequently decide whether or not it has satisfactory compliance and capital controls in place.

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In response, Senator Deborah O’Neill harassed that the loophole permitting FTX to primarily have an ASIC sign-off with out being investigated by the regulator presents a worrying prospect to Australian customers.

“Along with buying and selling of crypto in and of itself, simply because you’ve an AFSL ticked off by ASIC, there isn’t a assure there may be integrity?”

“FTX has had little or no [corporate] governance. We’re speaking about an actual cowboy who got here in, paid the worth [for an AFSL] … An AFSL was ticked off for all intents and functions from ASIC … however there may be enormous danger right here,” she added.