Australia is stepping up its oversight of digital assets, aiming to bring crypto exchanges and custody providers under the same rules as traditional financial institutions.
The government has released a draft law that could reshape the country’s crypto market, signaling tighter supervision and stronger consumer protections.
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Stricter Licensing Requirements
The draft legislation requires exchanges to obtain an Australian Financial Services License (AFSL), placing them under the supervision of the Australian Securities and Investments Commission (ASIC).
Currently, only platforms trading major assets likeBitcoin are registered with AUSTRAC. Under the new rules, all digital asset operators would need formal authorization to operate.
The law outlines requirements for wrapped tokens,staking, and the broader token infrastructure. Exchanges must implement secure custody practices, proper settlement procedures, and clear disclosure protocols. Regulators could impose penalties up to AUD 16.5 million, either calculated as a share of annual revenue or the financial benefit gained from violations.
Targeted Rules and Penalties
Low-risk operators could qualify for exemptions. Firms holding under AUD 5,000 per customer and processing less than AUD 10 million annually may not need full licensing. Treasury officials said these thresholds mirror those used for other financial products, reducing the burden on smaller firms.
Recently, Australia’s national financial intelligence agency introduced new rules for cryptocurrency ATMs, setting cash deposit and withdrawal limits at AU$5,000 (about US$3,250).
Announced by AUSTRAC in June, the rules also include stricter customer due diligence requirements, mandatory scam warnings, and enhanced transaction monitoring obligations for operators.
While the measures apply directly to crypto ATM providers, AUSTRAC said it expects local digital currency exchanges to consider implementing similar limits if they handle cash-based crypto transactions.
Related: Australia Imposes AU$5,000 Limit on Crypto ATM Transactions
However, even as the Australian regulator streamlines the rules, it is moving forward cautiously. Recently, ASIC announced that it removed over 9,240 pages of regulatory material this year in a major effort to simplify rules that businesses have described as overly complex and costly.
The first phase of the overhaul includes consolidating dozens of legal instruments and introducing digital services to replace paper-based processes. The initiative is part of a broader push to make the regulatory framework more accessible while maintaining protections for consumers and investors.
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This article was written by Jared Kirui at www.financemagnates.com.
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