Australia Proposes Crypto Platform Regulations

The draft legislation introduces two new categories under Australia’s Corporations Act: digital asset platforms and tokenized custody platforms. This structural innovation acknowledges the unique nature of cryptocurrency businesses while applying well-established financial services principles. Under the proposed framework, operators would need to obtain an Australian financial services license and comply with requirements to manage conflicts of interest, provide dispute resolution systems, and meet minimum custody and settlement standards. Assistant Treasurer Daniel Mulino emphasized that recent failures in the sector had exposed critical gaps in consumer safeguards, particularly regarding how operators handle client assets.

Mulino described the approach as extending ‘well-understood and time-tested Australian financial services frameworks to target the riskiest parts of these businesses.’ The legislation specifically addresses the practice of operators pooling and holding client assets, which has been a point of vulnerability in several high-profile crypto collapses globally. By bringing these activities under regulatory supervision, the government aims to create a safer environment for consumers while providing legitimate businesses with the certainty needed to operate and grow.

The proposed framework demonstrates particular foresight in its treatment of advanced crypto services that have traditionally fallen between regulatory cracks. The legislation sets out specific rules for wrapped tokens, public token infrastructure, and staking services—areas that Mulino acknowledged had ‘struggled to fit within frameworks built for traditional intermediaries.’ This targeted approach means these innovative services ‘will no longer have to be forced into frameworks that were never designed for them,’ providing both regulatory clarity and appropriate oversight.

Recognizing the rapid pace of technological change in the digital asset space, the legislation provides regulators with flexibility to adapt obligations as the industry evolves. Mulino cautioned that ‘rigid rules could leave gaps or stifle new businesses,’ indicating that the framework includes tools to adjust as technologies and services develop. This adaptive approach positions Australia to keep pace with innovation while maintaining robust consumer protections, aligning the country with international regulatory peers who are grappling with similar challenges.

The industry response has been cautiously optimistic, with key stakeholders acknowledging the importance of regulatory clarity. Tom Matthews, Head of Corporate Affairs at Australian crypto exchange Swyftx—a sponsor of the summit where the legislation was announced—told Decrypt that Australia needs to improve its regulatory environment to support national productivity. ‘We look forward to seeing the draft legislation and welcome the fact that the government has prioritized crypto so early in its new term,’ Matthews said, while emphasizing that ‘this is the start of a long process.’

The government is currently working with the Australian Securities and Investments Commission (ASIC) on transitional arrangements prior to the reforms taking effect. Mulino stressed that the consultation process would ensure the final law is workable, noting that ‘above all, we’ve heard that what you need is clarity.’ Matthews echoed this balanced approach, stating the imperative for ‘proper consumer protections that are balanced against the need for innovation.’ This collaborative process between regulators and industry participants suggests Australia is seeking to avoid the regulatory missteps that have hampered crypto development in other jurisdictions.