Australia's Approach to Crypto Licensing: Building Confidence While Encouraging Innovation
Australia plans to require all cryptocurrency exchanges to secure financial services licenses under the Corporations Act, a significant step that could transform the industry by bringing it in line with conventional financial oversight. Assistant Treasurer Daniel Mulino unveiled draft legislation mandating that exchanges obtain an Australian Financial Services Licence (AFSL) and comply with standards such as separating client assets and implementing strong cybersecurity measures What's Coming for Crypto Regulation in Australia? - OneSafe Blog [ 4 ]. With around 400 exchanges currently registered with AUSTRAC—many of which are inactive—the proposed regulations are intended to boost consumer safeguards and uphold market integrity Crypto exchanges to be required to hold financial services licences [ 1 ].
The new rules establish two regulated product types: "digital asset platforms," which enable cryptocurrency trading and transfers, and "tokenized custody platforms," which are responsible for holding tokenized assets What's Coming for Crypto Regulation in Australia? - OneSafe Blog [ 4 ]. These platforms will be held to the same requirements as banks and insurance companies, including minimum capital thresholds and clear governance structures. Exchanges that previously only needed AUSTRAC registration will now face more rigorous compliance demands, with penalties for violations reaching up to AUD 16.5 million (USD 10.8 million) or 10% of yearly revenue What's Coming for Crypto Regulation in Australia? - OneSafe Blog [ 4 ].
Importantly, the legislation provides exemptions for smaller, lower-risk operators. Platforms managing less than AUD 5,000 per client and processing under AUD 10 million in annual transactions will not be subject to the licensing rules What's Coming for Crypto Regulation in Australia? - OneSafe Blog [ 4 ]. This mirrors existing carve-outs for non-cash payment services and is designed to avoid overburdening innovation with regulation. Still, industry observers caution that even with these exemptions, small fintech firms may face higher compliance costs and operational challenges.
This regulatory overhaul is part of a wider international movement toward tighter crypto oversight. Australia’s proposed framework is similar to Singapore’s approach of integrating crypto into financial regulation and the European Union’s Markets in Crypto-Assets (MiCA) rules What's Coming for Crypto Regulation in Australia? - OneSafe Blog [ 4 ]. Unlike the U.S. and EU, however, Australia is focusing on a risk-based system, tailoring requirements to the size and activities of each business. For example, intermediaries dealing in stablecoins are exempt from separate licensing if they distribute assets issued by existing AFS license holders Australia's Financial Watchdog Offers Exemptions to Stablecoin ... [ 2 ].
Industry feedback is varied. Leading exchanges such as
The draft law is open for public feedback until October 24, 2025, with final legislation anticipated in 2026 What's Coming for Crypto Regulation in Australia? - OneSafe Blog [ 4 ]. There will likely be a transition period for license applications before enforcement begins in mid-2025. This schedule gives businesses time to adjust, though early preparation is highly recommended. The government’s goal is to make Australia a leading Asia-Pacific center for crypto innovation, balancing strong regulation with open market access.
As the industry adapts to these changes, attention will be on how well the new rules manage risks without hindering progress. With more than 5.6 million Australians involved in crypto and rising institutional interest in tokenized assets, the effectiveness of these reforms will depend on their ability to build trust while supporting the fast-evolving digital finance landscape.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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