Australia is planning to tighten cryptocurrency regulations with the aim of placing digital asset service providers under the same legal framework as traditional financial institutions. The proposed law is now a form of draft, seeking to enhance clarity for crypto companies operating within the country’s evolving markets while increasing surveillance and protecting consumers. This development demonstrates Australia’s intention to solidify its position as a key player in regulating crypto and blockchain activities.
- The bill aims to extend financial sector laws to crypto exchanges and calls for new licensing standards.
- The proposed rules introduce two new financial products: a digital asset platform and tokenized custody services.
- Violation of the law could result in penalties of up to 106.5 million copies, but low-risk platforms are exempt.
- The reform focuses on increasing consumer protection amid concerns about assets held without safeguards.
- Stakeholder feedback is required to improve the law before formal implementation.
Australia is poised to overhaul the cryptocurrency regulatory framework with a new draft law that will allow you to reshape the way digital assets are managed and traded domestically. Assistant Associate Daniel Murino explained at a recent Crypto conference that the legislation will serve as a fundamental component of Australia’s digital asset strategy, announced earlier this year.
Unlike the current system where only crypto exchanges that promote Bitcoin and other asset transactions are registered with Austrac, the proposed law introduces a wider range of licensing requirements. Murino indicated that the bill is seeking to formally classify digital asset platforms and custody providers, requiring that they hold Australian Financial Services Licenses (AFSL). The purpose of this step is to bring digital asset services into a more structured and regulated environment and align with traditional financial institutions overseen by the Australian Securities and Investment Commission (ASIC).
Murino emphasized that the law includes target regulations for certain activities, such as wrapped tokens, public token infrastructure and staking mechanisms. Additionally, cryptographic platforms must adhere to standards designed to accommodate the unique capabilities of digital assets. This should cover areas such as secure custody, transaction settlement, and transparency.
Murino addressed concerns about the risks of digital assets and highlighted that recent failures revealed vulnerabilities. The new rules aim to formalize good practices, eliminate bad actors, provide clear guidelines and legal certainty with compliant operators, and increase consumer confidence.
“This is to legalize good actors and keep out the bad things. It’s to give businesses certainty and consumer trust.”
It’s a heavy penalty, but exemption from low-risk platforms
Violations of the new rules can attract fines up to 16.5 million ant ($10.8 million) in proportion to benefits earned or based on a percentage of annual revenue. However, the platform is considered low risk (holds less than 5,000 Auds ($3,300) per customer and promotes less than 10 million AUD ($6.6 million) each year, but is exempt from these requirements.
The Treasury explained that these exemptions are consistent with practices in other financial products, such as non-cash payment facilities, indicating their intention to regulate small or emerging crypto companies without throttling them. Importantly, the Act does not aim to overregulate crypto issuers or issuers using digital assets for non-financial purposes in order to maintain a balanced approach to innovation and protection.
As Australia advances its regulatory agenda, the crypto industry and investors will closely monitor how these reforms will affect the growth and security of the local digital asset ecosystem.