As Australia initiates an ambitious overhaul of its cryptocurrency regulations, the government has revealed plans for an extensive framework designed to integrate digital assets into the mainstream economy. Drawing inspiration from regulatory models established in the European Union and Singapore, Australian authorities have published a white paper outlining thorough measures that will bring crypto exchanges under existing financial services laws, with draft legislation scheduled for public consultation in 2025.
The cornerstone of this regulatory transformation involves classifying cryptocurrency exchanges as Digital Asset Platforms (DAPs), requiring them to obtain an Australian Financial Services Licence. These platforms must adhere to capital adequacy requirements and implement robust custody solutions to safeguard customer assets, with external custodians becoming mandatory for asset storage. This initiative is part of the Albanese-led government’s broader strategy to establish a crypto regulation framework that balances innovation with consumer protection.
Australia’s bold regulatory framework transforms crypto exchanges into licensed DAPs, enforcing capital requirements and external asset custody to protect investors.
The framework strategically exempts small-scale platforms and entities not providing financial services, demonstrating a nuanced approach to regulation.
Australia’s regulatory vision extends beyond exchange oversight to include pioneering initiatives in tokenization and digital currencies. The government has announced plans to pilot tokenized money trials, exploring the potential for reducing settlement risk and transaction costs across the financial system. The initiative represents unprecedented collaboration among regulators including the Australian Treasury, ASIC, and the Reserve Bank of Australia.
While authorities are investigating wholesale Central Bank Digital Currency applications, they have explicitly ruled out introducing a retail CBDC in the immediate future.
The reforms also address the persistent challenge of “debanking,” with the government collaborating with Australia’s four major banks to develop solutions for cryptocurrency firms struggling to maintain banking relationships. This approach parallels efforts in other jurisdictions, including the United States’ FIRM Act proposed by Senator Tim Scott.
Industry leaders have responded positively to the regulatory overhaul, anticipating increased investment in Australia’s cryptocurrency sector despite concerns regarding the potential burden of capital and custody requirements. Unlike DeFi’s 24/7 operations, these regulated exchanges will likely follow established market hours similar to traditional financial institutions.
