Australia Set to Bring Crypto Exchanges Under Full Financial Regulation

Key Takeaways 

• Australia plans to license crypto exchanges and custody firms under the same legal framework as traditional finance.
• ASIC supervision will focus on protecting customer assets rather than regulating blockchain technology itself.
• Small operators are exempt, while larger platforms receive an 18-month transition period to comply.

The move ends years of debate over whether exchanges and custodians should continue operating under a light-touch regime while holding billions in client assets.

A Regulatory Reset for the Crypto Sector

The newly introduced Digital Assets Framework Bill 2025 would force trading venues and custody firms to obtain an Australian Financial Services License (AFSL) — a requirement currently reserved for companies dealing in traditional financial products. This represents a dramatic break from today’s rules, where a platform can store customer crypto without being subject to the safeguards applied to banks, brokers, or money managers.

Assistant Treasurer Daniel Mulino told parliament that the absence of obligations around client-asset protection has left consumers overly exposed. He pointed out that platforms are often allowed to hold vast amounts of cryptocurrency on behalf of Australians without the guardrails that exist in traditional finance.

Protecting Users, Not Regulating the Technology

Rather than writing laws about blockchains or tokens themselves, the bill focuses squarely on businesses that custody investor funds. Two new categories — digital-asset platforms and tokenized-custody platforms — will become regulated financial-services products, requiring ASIC oversight and minimum standards around security, settlements, fee transparency, and risk disclosure.

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Mulino emphasized that the reform aims to ensure that activities equivalent to financial services face equivalent obligations, regardless of the technological wrapper used to deliver them.

Not Every Platform Will Be Captured

To avoid suffocating smaller operators and early-stage projects, the framework includes exemptions. Firms recording less than 10 million AUD in 12-month transaction volume — or those whose crypto services are incidental to a non-financial business — will fall outside licensing requirements.

Large operators will not be forced into immediate compliance. The legislation includes an 18-month transition window, giving platforms time to build the infrastructure necessary to meet ASIC standards.

What Happens Next

The bill is expected to move swiftly through the House of Representatives, where the Labor government holds a strong majority. Its path through the Senate will depend on crossbench or opposition support, though analysts expect progress given the broad industry and policy interest in clearer rules.

If passed, Australia would shift from one of the more lightly regulated developed crypto markets to one of the most consumer-protection-driven — a posture intended to prevent FTX-style collapses while still supporting the digital-asset industry.

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