Australia Moves Toward Stronger Crypto Regulation with Bank-Grade Standards

TLDR

• Australia proposes stricter crypto rules, requiring licenses and stronger oversight.
• New Australian crypto regulations will enforce licensing, transparency, and penalties.
• Crypto platforms in Australia face new rules, including licenses and consumer protection.
• Australia tightens crypto laws with mandatory licenses, stronger oversight, and penalties.
• Australia’s crypto regulations aim for security with licensing and consumer protections.

Australia is introducing new regulatory measures aimed at establishing stronger oversight for cryptocurrency platforms. The government has released an exposure draft to amend the Corporations Act, bringing crypto exchanges and custodians under a stricter legal framework. The draft proposes two new categories for crypto services, “digital asset platforms” and “tokenized custody platforms,” ensuring that these businesses comply with bank-like regulations. The public consultation on the proposed rules will conclude on October 24, after which the Treasury will finalize its next steps.

New Framework Introduces Licensing and Regulatory Requirements

The proposed regulation mandates that crypto platforms obtain an Australian Financial Services Licence (AFSL), similar to those held by traditional custodians. This licence would ensure that firms operate efficiently, fairly, and transparently, offering better consumer protection. The regulation would also require platforms to meet strict conduct and disclosure standards, monitored by the Australian Securities and Investments Commission (ASIC). These measures are designed to align crypto services with those provided by conventional financial institutions, offering users greater security and trust.

The draft outlines the specific obligations for businesses that handle client tokens, including those engaged in trading, staking, and asset safeguarding. Additionally, businesses involved in issuing tokens based on underlying assets like commodities or securities would be subject to a more detailed oversight framework. By requiring crypto platforms to publish a “Platform Guide,” the government aims to improve transparency, detailing risks, service functions, and fees, helping consumers make more informed decisions.

Enforcement and Penalties for Non-Compliance

To ensure adherence to the new regulations, the government has proposed severe penalties for violations. Companies that fail to comply could face fines up to A$16.5 million or 10% of their annual turnover, whichever is greater. Smaller platforms may be exempt from some of these requirements, particularly if they handle small transaction volumes or hold limited assets per customer. This move aligns with Australia’s broader strategy to prevent financial harm and ensure that only trustworthy businesses operate in the crypto space.

The government has made it clear that these reforms are meant to combat risks associated with the custody of digital assets. With incidents such as frozen withdrawals and mismanagement of client funds emerging in the past, tighter regulations aim to safeguard against these vulnerabilities. Industry leaders have welcomed the move, viewing it as an essential step toward ensuring stability and growth in the Australian crypto sector.

Global Impact and Comparison with Other Jurisdictions

Australia’s proposed regulations place it in line with international efforts to regulate digital assets. In Europe, the Markets in Crypto-Assets (MiCA) Regulation sets a clear framework for digital asset services, while the UK is moving toward incorporating crypto under its existing financial laws. North America remains divided, with the U.S. still lacking a unified regulatory framework. Australia’s approach, focusing on licensing and oversight via ASIC, aims to create a more predictable environment for crypto businesses, ultimately positioning the country as a leader in the global digital asset industry.

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