Australia Drafts Law to Tighten Oversight of Digital Asset Platforms

Australia has released a draft law to regulate digital asset platforms and proposes a framework to extend the financial services law to crypto companies to enhance consumer protection and provide clarity to the industry.

Advisor Daniel Murino announced the reforms on Wednesday at the Australian Digital Economic Council’s Global Digital Asset Regulation Summit.

He described the bill as the “centrestone” of the government. Digital Asset Roadmapwhich was released in March and said it would line up Australia with its international peers.

“This is about legalizing good actors and keeping out the bad things,” Murino said. “It’s about giving businesses certainty and consumer trust.”

The bill formally defines two new financial instruments based on the Corporate Act, digital asset platforms, and tokenized custody platforms, bringing them under the same licenses and consumer protection regulations that apply to traditional finance.

Operators must require an Australian financial services license, manage conflicts of interest, provide a dispute resolution system, and meet minimum custody and settlement standards.

Those who violate the rules may face penalties of up to 10% of their annual revenue, but small platforms with less than $5,000 (USD 3,300) per client and less than $10 million (USD 6.6 million) per year trading are exempt.

Mulino said the recent failures in the sector have revealed gaps in consumer protection measures, particularly when operators are holding client assets in pooling.

“We are working on this by expanding our well-understood and implemented Australian financial services framework to target the most risky portions of these businesses,” he said.

The bill also sets rules for wrapped tokens, public token infrastructure, and staking.

“This means they don’t have to be forced into a framework that isn’t designed for them,” he said.

Recognizing the pace of technology change, the law provides regulators with the flexibility to adapt their obligations.

“Strict rules can leave gaps or curb new businesses,” Murino said. “So the framework includes tools to coordinate as technology and services are developed.”

The government is working with the Australian Securities and Investment Commission and the Commission on Interim Agreements before reforms take effect.

Murino said the consultation process ensures that the final act is viable. “More than anything, we’ve heard that it’s clear what you need,” he said.

I’ll talk Decryption, Tom Matthews, said Corporate Affairs Head of Australia’s Crypto Exchange Swyftx, sponsoring Wednesday’s event. Decryption Australia needs to improve In that regulatory environment, “sufficiently enough for our industry to support country productivity.”

“We look forward to seeing the bill and welcome the fact that the government prioritizes cryptography early in its new term,” he added. “This is the beginning of a long process, but it’s essential that there is adequate consumer protection that is balanced with the need for innovation.”