Quick Breakdown
- Mandatory Licensing: Digital asset platforms must secure an Australian Financial Services License and meet conduct standards.
- Heavy Penalties: Breaches could cost up to 10% of annual turnover or A$16.5 million.
- Global Alignment: The framework mirrors EU, Singapore, and OECD standards while extending strong consumer protections.
New draft legislation targets exchanges and custodians
Australia is moving to tighten oversight of its crypto industry with draft legislation that would require digital asset platforms to obtain licenses or face steep penalties. The Treasury unveiled the proposal on September 24, aiming to bring exchanges and custody providers under the Corporations Act, Bloomberg reported.
Under the draft, platforms must hold an Australian Financial Services License (AFSL) and adhere to strict conduct rules such as acting “honestly and fairly,” maintaining cybersecurity safeguards, and providing clear risk disclosures.
Penalties and exemptions
Breaches of the rules could attract penalties equal to the greater of A$16.5 million ($10.9 million), three times the benefit gained, or 10% of a firm’s annual turnover. Smaller operators would be exempt if their operations remain under A$5,000 per customer and below A$10 million in yearly transactions.
International alignment and consumer protection
The proposed framework extends consumer safeguards to custody services and trading platforms but excludes decentralized tokens not run by intermediaries. Treasury noted the framework aligns with global standards such as the EU’s MiCA, Singapore’s Payment Services Act, and the OECD’s Crypto-Asset Reporting Framework for tax compliance.
Key requirements include segregating client assets, dispute resolution mechanisms, and addressing the issue of “debanking” by working with major banks to ensure crypto businesses retain financial access.
Industry reaction and timeline
Crypto players have responded positively. Coinbase Australia head John O’Loghlen said the rules would provide clarity and boost competitiveness, while Kraken’s local lead Jonathon Miller praised the extensive consultation behind the bill.
The proposal builds on Australia’s March 2025 digital assets roadmap and, if passed, would create one of the most comprehensive regulatory regimes in the Asia-Pacific. Consultation is open until October 24, with final legislation expected later in 2025 and a 12-month transition period to follow.
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