Australia Proposes New Crypto Exchange Licensing Rules

The Australian Treasury has taken a significant step toward formalizing the cryptocurrency sector with new draft legislation that would bring digital asset platforms under existing financial product regulations. The proposed changes to the Corporations Act 2001 would require cryptocurrency exchanges and tokenized custodial platforms to obtain Australian financial services licenses (AFSL), placing them under the same regulatory framework that governs conventional financial intermediaries. Assistant Treasurer Daniel Mulino announced the draft legislation at a recent Sydney summit hosted by the Digital Economy Council of Australia, describing the approach as expanding current financial services laws in a “focused way.”

The legislation specifically targets two categories of platforms: Digital Asset Platforms (DAPs), which include crypto exchanges and brokerages, and Tokenized Custodial Platforms (TCPs), which handle tokenized physical assets. Both would be classified as financial products under the new regime, subjecting them to the same licensing requirements and consumer protection standards as traditional investment portfolio operators. The Treasury has emphasized that its regulatory focus is on companies that hold assets for clients rather than the digital tokens themselves, marking a pragmatic approach to oversight.

The Australian Securities and Investments Commission (ASIC) has been identified as the central authority responsible for enforcing the new regulations. Under the proposed framework, ASIC would oversee licensing requirements for corporations offering trading services and monitor compliance to ensure DAPs and TCPs adhere to the new rules. This expanded mandate represents a significant increase in ASIC’s oversight of the cryptocurrency sector, which currently only requires exchanges to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations.

The enhanced regulatory approach comes in response to what the Treasury describes as “recent breakdowns of digital asset intermediaries” that have resulted in significant consumer losses. By bringing crypto platforms under ASIC’s purview, the government aims to build consumer confidence and mitigate risks associated with digital asset investments. The move aligns with international trends toward stronger oversight of cryptocurrency markets while addressing specific vulnerabilities in the Australian ecosystem.

While the draft legislation represents a significant tightening of regulations, the Australian government appears conscious of maintaining a balance between consumer protection and industry growth. Recent actions by ASIC, including a class exemption for stablecoin intermediaries that permits authorized firms to issue stablecoins without obtaining individual approvals for each issuer, demonstrate a nuanced approach. This exemption suggests that while Australia is increasing regulation in some areas, it remains committed to fostering innovation within the digital asset industry.

The consultation period for the draft legislation remains open until October 24, 2025, giving industry stakeholders an opportunity to provide feedback on the proposed changes. This extended timeline reflects the complexity of implementing such sweeping regulatory changes and acknowledges the need for careful consideration of industry perspectives. The outcome of this consultation process will likely shape the future of cryptocurrency regulation in Australia for years to come.

The Treasury’s proposal represents a maturation of Australia’s approach to digital assets, moving beyond basic AML/KYC requirements toward a comprehensive framework that aligns crypto intermediaries with traditional financial institutions. As the global cryptocurrency market continues to evolve, Australia’s attempt to create a safer investment landscape while encouraging responsible innovation could serve as a model for other nations grappling with similar regulatory challenges.