After high-profile actions against Binance, Australia is advancing a regulatory framework to impose bank-style standards on crypto trading platforms.
Summary
- Australia’s draft bill released September 25 would bring exchanges and custody providers under AFSL licensing and ASIC oversight, extending financial-services law to crypto platforms.
- The proposal introduces digital asset platforms and tokenised custody platforms, targeting intermediaries holding client assets, while excluding self-custody wallets and stablecoin issuers for now.
- Penalties align with corporate law: up to A$16.5m, three times gains, or 10% of turnover, with smaller platforms possibly exempt under thresholds.
- uThe reforms mirror MiCA in Europe and UK proposals, potentially reshaping Australia’s crypto market through safer custody, higher compliance costs, and consolidation among larger players.
Australia pushes for bank-grade crypto rules
Australia is preparing to extend financial services law to crypto platforms. On Sep. 25 the government released an exposure draft outlining how exchanges and custody businesses would be brought within the existing framework.
Assistant Treasurer and Financial Services Minister Daniel Mulino introduced the proposal at the Digital Economy Council’s regulatory summit. Consultation will remain open until Oct. 24, after which Treasury will decide next steps.
The draft creates two new categories in the Corporations Act: “digital asset platforms” and “tokenised custody platforms.”
Firms in these areas would be required to obtain an Australian Financial Services Licence, the same licence used for traditional custodial products, but with additional crypto-specific obligations.
Exchanges and custody providers that hold client tokens would face conduct, disclosure, and supervision standards set by the Australian Securities and Investments Commission.
The push follows recent enforcement actions that exposed gaps in oversight. ASIC sued Binance Australia Derivatives in December 2024 over allegations of misclassifying retail clients. In August 2025, AUSTRAC ordered Binance’s local unit to appoint an external auditor as part of anti-money laundering compliance.
Custody rules, platform guides, and penalties
The exposure draft sets out how Australia plans to regulate custody-based crypto services.
A “digital asset platform” is defined as an arrangement where an operator holds tokens for clients and may handle transfers, trades, staking, or market making.
A “tokenised custody platform” is where an operator holds an underlying asset such as a commodity or security and issues a token that records client entitlements.
Both categories are aimed at intermediaries that pool or control client assets, rather than classifying the tokens themselves as financial products. Where an underlying asset already qualifies as a financial product, the token recording ownership would be treated as an interest in that product.
The draft carves out exclusions. Non-custodial software, such as self-hosted wallets and automated market makers, sits outside the regime since operators do not take possession or control of client assets.
Stablecoin issuers are also excluded at this stage, with Treasury confirming they will be addressed separately under payments licensing reforms.
Licensing obligations focus on operational standards and client protection. Platforms must meet ASIC-set benchmarks for transaction handling, settlement, and asset safeguarding.
Each operator would also be required to publish a “Platform Guide” setting out custody terms, service functions, fees, risks, and reporting duties.
These requirements draw from existing financial services law, including prohibitions on misleading conduct, restrictions on unfair contract terms, and rules around design and distribution. The intention is to give customers protections comparable to those they would receive if they accessed the underlying assets directly.
Penalties for breaches align with the corporate penalty framework. Civil penalties can reach the greater of A$16.5 million, three times the benefit gained, or 10% of annual turnover, capped at 2.5 million penalty units.
Treasury has also raised proportionality concerns, with smaller services potentially exempt if they hold less than A$5,000 per customer or process under A$10 million in annual volume, though consultation will decide final thresholds.
Government statements cite repeated custody-driven risks as justification for the approach. Frozen withdrawals, commingled client funds, undisclosed proprietary trading, weak governance, and cyber theft have all surfaced when large pools of assets were left with unregulated providers.
How Australia’s draft fits the global puzzle
Australia’s draft is best understood against other jurisdictions shaping crypto rules.
In the European Union, the Markets in Crypto-Assets Regulation sets the benchmark. Rules for e-money and asset-referenced tokens took effect in June 2024, followed by the wider framework for service providers in December 2024.
A transition period extends into 2026, giving regulators time to phase in licensing. The effect is already visible, with exchanges adjusting or delisting stablecoins and service providers preparing authorization filings.
Unlike Australia’s approach through ASIC and the Corporations Act, MiCA is a purpose-built statute with technical standards overseen by ESMA and the EBA.
The United Kingdom’s plan sits between the EU and Australia. Draft statutory instruments published in April 2025 would fold crypto into the Financial Services and Markets Act, with the FCA responsible for detailed rules.
The model borrows from existing law but creates a distinct perimeter for crypto, reflecting a hybrid between MiCA’s bespoke framework and Australia’s reliance on AFSL licensing.
North America shows greater divergence. Canada requires platforms to register or enter pre-registration undertakings under securities law, with obligations on custody, asset segregation, and permitted tokens.
The U.S. still lacks a full federal regime. In July 2025, Congress passed the GENIUS Act to regulate payment stablecoins, leaving the Treasury to design implementation, while other bills remain pending.
In January 2025 the SEC dropped its lawsuit against Coinbase, marking a retreat from earlier federal enforcement, while state regimes such as New York’s BitLicense remain in place.
Asia provides further contrasts. Singapore finalized a stablecoin framework in August 2023 covering tokens pegged to the Singapore dollar or G10 currencies, alongside licensing under the Payment Services Act.
Hong Kong passed legislation in May 2025 requiring stablecoin issuers to be licensed from August 2025, though no issuers have yet been listed.
Japan remains the most established example, with exchange licensing since 2017 and stricter measures after local failures. In March 2025, the Financial Services Agency signaled amendments due in 2026 that would treat some tokens as financial products and apply insider trading rules.
Australia’s draft therefore places it among jurisdictions extending existing financial law to crypto rather than creating entirely new codes. If enacted, the bill would establish a single national licensing route for exchanges and custodians, while leaving stablecoin oversight to payments law.
Crypto adoption faces a new regulatory test
International experience suggests the impact on products could be tangible. MiCA’s stablecoin rules began applying in the European Union in 2024, and exchanges have already adjusted product offerings to prepare for compliance.
A similar shift is possible in Australia once payments-stablecoin licensing is introduced and AFSL obligations take hold. Platforms able to absorb licensing and compliance costs are more likely to remain, pointing toward consolidation around larger players.
Recent activity in traditional finance supports this direction. In September 2025, IG Group announced a A$178 million acquisition of Sydney-based exchange Independent Reserve, showing how established institutions are positioning for the new regime.
Banking access is another area likely to evolve. Australian banks have imposed limits on payments to some exchanges in recent years, citing scam risks.
Licensed operators with stronger governance and custody standards could reduce those concerns, improving access to domestic payment rails and reducing reliance on offshore accounts.
Investor flows may also shift. Spot bitcoin ETFs launched in Australia in 2024, with issuers including VanEck, DigitalX, and Monochrome on ASX and Cboe.
As AFSL-licensed custody standards settle in, retail and adviser demand may concentrate further in exchange-traded funds and licensed venues rather than offshore platforms.
Surveys from the Independent Reserve Cryptocurrency Index show about 31% of Australian adults held or had held crypto in 2025, up from around 28–29% a year earlier.
For this group, stronger safeguards, complaint mechanisms, and tested custody norms could lower losses in the event of failure. At the same time, compliance costs may lift fees, token listings may narrow, and yield-style products may face greater scrutiny.
The key variable is timing. Consultation runs until Oct. 24, and if the bill advances with limited changes, 2026 is expected to mark the start of licensing transitions and the first visible impact on product availability, banking access, and the balance between listed crypto funds and direct trading platforms.
