Australia Moves to Tighten Rules on Crypto Service Providers

Australia proposes stricter crypto rules to boost investor protection, align with global standards, and foster a secure, innovative market.

Australia is preparing to bring its crypto sector under a stricter regulatory framework. The Treasury has released a draft bill that places crypto service providers within the Corporations Act. The step is viewed as a move toward building a more institutionalized market. The draft aims to improve standards of custody, governance, and consumer protection. It also reflects lessons drawn from the collapse of FTX, which had global repercussions.

Digital Asset Bill Aims to Balance Regulation and Growth

The proposal introduces two new legal categories. These are digital asset platforms and tokenized custody platforms. Operators in these categories must apply for an Australian Financial Services Licence. The bill also requires them to meet conflict of interest standards, adopt clear dispute resolution systems, and comply with minimum custody rules. The law would apply to platforms holding more than AUD 1,500 for a client or AUD 5 million in assets overall.

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Australia’s current system requires exchanges to register with AUSTRAC for anti-money laundering purposes. However, these rules have been considered insufficient for investor protection. The new draft provides stronger alignment with traditional financial services oversight. At the same time, it avoids excessive red tape that could block innovation. Authorities believe this framework will bring trust and stability without undermining market growth.

Industry reaction has been broadly supportive. Executives say stronger safeguards are overdue, especially for custody. Market participants believe the framework will prevent major fraud and insolvency cases. However, smaller exchanges and service providers may face higher compliance costs. Some experts expect that smaller platforms could consolidate or exit the market due to increased costs. Larger players may benefit from stronger consumer trust and greater capital inflows.

Australia Aligns Crypto Rules with EU and U.S. Standards

Globally, the draft bill brings Australia in line with other major jurisdictions. The European Union has moved forward with its Markets in Crypto-Assets Regulation, known as MiCA. In the United States, the Securities and Exchange Commission is advancing enforcement and oversight of token platforms. By following this trend, Australia strengthens its position as a financial hub in the Asia-Pacific region. The move may also attract more institutional investors seeking regulatory clarity.

For local investors, the new rules could improve confidence. A stronger framework would reduce fraud risk and improve custody of digital assets. Trading volumes may slow temporarily as companies adjust to compliance requirements. Over the long term, however, experts expect stronger growth in decentralized finance and non-fungible tokens. By balancing consumer protection with open innovation, Australia is setting the stage for a sustainable crypto market.

Consultation on the draft law remains open until October 24, 2025. If adopted, the rules would take effect in 2026, with a 12-month transition period. In the meantime, ASIC has granted a class exemption allowing licensed intermediaries to distribute stablecoins without separate approval. This indicates that authorities are trying to combine stricter oversight with targeted flexibility.

The Treasury’s proposal could reshape the landscape of digital assets in Australia. By linking innovation with accountability, the framework aims to create a market that is both secure and competitive.

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