Australia Moves Toward Full Licensing Regime for Crypto Platforms

Australia has taken a significant step toward bringing digital asset businesses under traditional financial oversight, unveiling draft legislation that would require crypto platforms and tokenized custody providers to obtain financial services licenses. The proposal, released by Treasury officials this week, outlines a regulatory framework designed to align crypto intermediaries with the standards applied to banks, brokerages, and other financial institutions.

The consultation period will run until October 24, 2025, giving industry participants time to submit feedback before the legislation advances. Officials have emphasized that the focus is on companies holding client assets rather than on regulating the underlying digital assets themselves. Assistant Treasurer Daniel Mulino described the plan as “the cornerstone of our digital asset roadmap,” highlighting its intention to extend existing financial services laws while adapting them to the unique characteristics of crypto.

Under the current regime, Australian crypto exchanges are only required to comply with Anti-Money Laundering and Know Your Customer obligations. The proposed changes would bring them under the direct authority of the Australian Securities and Investments Commission, subjecting operators to full licensing obligations, ongoing compliance, and stricter consumer protection requirements.

The legislation also introduces two new financial products under the Corporations Act. Digital asset platforms are defined to include exchanges and brokerages where cryptocurrencies and tokens are traded, while tokenized custody platforms would cover businesses safeguarding tokenized versions of physical assets. By formalizing these categories, regulators aim to close the gaps exposed by past failures in the crypto sector, which have led to substantial consumer losses.

Consumer protection has been the central driver of the initiative. In recent years, several high-profile collapses of trading platforms left Australian investors without recourse. Lawmakers argue that bringing intermediaries into the established licensing system is essential to restore trust, provide transparency, and reduce the risks associated with inadequate governance. Penalties for non-compliance are set to be severe, with fines reaching AU$16.5 million, three times the value of ill-gotten gains, or up to 10 percent of annual turnover, depending on the severity of the violation.

Smaller operators will not be left without flexibility. Platforms handling less than AU$5,000 per customer and generating under AU$10 million annually would be exempt from licensing requirements, an acknowledgment of the importance of maintaining innovation and entry-level competition in the sector.

The move has already drawn support from major crypto exchanges operating in Australia. Industry leaders have signaled that they view clear licensing standards as a welcome step toward legitimizing the sector. For responsible operators, the framework promises a level playing field, while investors stand to benefit from improved safeguards. With global regulatory momentum building, Australia’s approach underscores its determination to balance innovation with stability in one of the world’s fastest-growing financial frontiers.