Australia has moved forward with legislation that will place cryptocurrency platforms under the same regulatory framework as traditional financial institutions. The move represents a significant shift in how digital asset companies operate within the country.
Assistant Treasurer Daniel Mulino presented the Corporations Amendment (Digital Assets Framework) Bill 2025 to Parliament on Wednesday. The proposed law requires crypto exchanges and custody providers to obtain an Australian Financial Services License (AFSL).
Mulino emphasised the importance of keeping Australia competitive in the rapidly evolving digital finance sector. He stated that proper regulation could attract investment and create employment opportunities while establishing the nation's financial system as a leader in innovation.
The Treasury Department opened consultations on the draft bill in September. Mulino had previously described this legislation as the foundation of the government's cryptocurrency strategy, unveiled earlier in the year.
Protection Measures for Client Assets
Current regulations allow companies to hold unlimited amounts of customer cryptocurrency without financial safeguards. Mulino highlighted this gap as a significant risk factor for Australian consumers.
The assistant treasurer referenced high-profile failures like FTX to underscore the dangers of inadequate oversight. He explained that the new bill aims to close existing loopholes while ensuring similar activities face comparable regulatory obligations.
The legislation focuses specifically on companies that hold digital assets on behalf of customers. This approach targets custodial services rather than attempting to regulate underlying blockchain technology.
Mulino noted that this focus allows the regulatory framework to adapt as tokenization and digital services continue to develop. The structure avoids becoming obsolete as new technologies emerge.
Licensing Requirements and Exemptions
The bill creates two distinct categories of financial products under the Corporations Act. These are digital asset platforms and tokenized custody platforms. Both categories will require an AFSL to operate legally.
Licensed platforms must register with the Australian Securities and Investments Commission (ASIC). Currently, only exchanges offering financial products such as derivatives face this requirement. Most crypto businesses simply register with the Australian Transaction Reports and Analysis Centre, which lists approximately 400 registered exchanges, though many remain inactive.
The legislation defines financial services broadly. Any entity advising on, dealing in, or arranging transactions in cryptocurrency must obtain appropriate licensing. This expands regulatory coverage significantly beyond current requirements.
Licensed platforms must meet ASIC's minimum standards across multiple operational areas. These include transaction processing, settlement procedures, and asset custody practices. Companies must also provide clients with comprehensive disclosure documents explaining services, fee structures, and associated risks.
The bill includes provisions for smaller operators. Businesses with an annual transaction volume of less than $10 million will receive an exemption from licensing requirements. Companies that handle crypto incidentally to their primary non-financial operations also qualify for exemption.
An 18-month transition period will allow existing businesses to obtain necessary licenses without immediate penalties. Mulino described this grace period as support for companies attempting to comply with new regulations.
The bill faces favourable prospects in the House of Representatives. The ruling Labor Party holds a commanding 94-seat majority under Prime Minister Anthony Albanese's leadership.
The Senate will then consider the legislation. Labor may require support from crossbench senators and opposition parties to secure passage in the upper house.
