Australian crypto firms are largely backing the government's draft legislation to regulate digital asset platforms, but significant concerns remain regarding certain aspects of the proposed laws. The draft legislation, revealed on September 25, 2025, seeks to integrate crypto exchanges and custody providers into the existing financial regulatory framework by amending the Corporations Act 2001. This would require crypto businesses to obtain an Australian Financial Services Licence (AFSL).
The proposed laws aim to provide greater consumer protection and regulatory clarity, addressing the uncertainty that has long plagued the Australian crypto sector. Assistant Treasurer Daniel Mulino stated the framework intends to legitimize responsible actors, weed out bad actors, provide businesses with certainty, and boost consumer confidence.
Under the draft legislation, digital asset platforms (DAPs) and tokenized custody platforms (TCPs) would be treated as financial products, subjecting them to a full suite of licensing rules and consumer protections. The Australian Securities and Investments Commission (ASIC) would be the primary regulator responsible for issuing licenses and ensuring compliance. License holders would face obligations related to conduct, disclosure, risk management, and dispute resolution. Penalties for breaches could reach as high as $16.5 million or 10% of annual turnover. Smaller platforms, with less than $5,000 per customer and $10 million in annual transactions, would be exempt.
Industry response to the draft legislation has been generally positive. Kate Cooper, CEO of OKX Australia, commented that the draft legislation signals crypto is no longer operating on the fringes but is now embedded in the financial system. Coinbase's Australian Country Director, John O'Loghlen, stated that clear regulation would support economic growth and increase consumer choice. Liam Hennessy, a partner at Thomson Geer, lauded the bill as critical to the growth of the country's digital asset sector, praising its balance between restricting innovation and promoting turmoil.
Despite the support, crypto firms have voiced concerns about the implementation and scope of the laws. A key worry is whether the framework will effectively prevent unregulated players from undercutting licensed operators, emphasizing the need to protect Australian consumers. Some experts have pointed out that the success of the framework hinges on its implementation.
The draft legislation is open for public consultation until October 24, 2025, and the government is encouraging feedback from industry stakeholders, consumers, and regulators. The final legislation is expected in 2026.
The collapse of FTX in 2022 underscored the need for regulation, highlighting the dangers of unregulated platforms. The Australian government's response is to extend the Corporations Act to cover digital asset activities, giving ASIC direct oversight of exchanges, custody providers, and tokenized financial products. The legislation also pays special attention to stablecoins, requiring them to maintain 1:1 collateral backing and transparency.
The proposed framework does not impose new restrictions on token issuers or businesses that use tokens for non-financial purposes. The focus is on businesses that hold assets on behalf of clients, rather than the digital assets themselves.
The move towards regulation aligns Australia with other jurisdictions seeking to establish themselves as digital asset hubs. The country's existing regulations only require crypto exchanges to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) and implement anti-money laundering and Know Your Customer policies. The new framework will expand obligations to services like staking, wrapped tokens, custody, and settlement.
