UPDATE: Australia’s digital asset landscape is undergoing a monumental shift as the Treasury just announced a draft legislation mandating Australian Financial Services Licence (AFSL) requirements for cryptocurrency platforms. Released on September 25, 2025, this urgent framework directly impacts how digital asset operators will conduct business in Australia, subjecting them to rigorous oversight by the Australian Securities and Investments Commission (ASIC).
This new licensing regime is crucial for enhancing market transparency and consumer protections, as platforms transacting over $10 million annually or holding more than $5,000 per customer will now be required to obtain an AFSL. Assistant Treasurer Daniel Mulino stated that the reforms aim to extend existing financial services laws rather than create an entirely new regulatory structure, reflecting a significant evolution in the Australian financial system.
The implications are substantial: licensed platforms must adhere to strict governance standards and consumer protection requirements akin to those faced by traditional financial institutions. This includes obligations related to custody arrangements, settlement processes, and clear disclosures on fees and risks. Failure to comply will result in hefty penalties, with ASIC being the enforcement authority.
As digital assets gain credibility, investors are particularly focused on price movements, such as the current valuation of Ethereum at around $5,800 AUD. The new regulations promise to standardize pricing mechanisms, ensuring fair dealing practices across the board. This level of transparency is expected to significantly benefit retail investors, who have historically faced challenges due to information asymmetries in the market.
The draft legislation introduces new categories for financial products within the Corporations Act 2001, including Digital Asset Platforms and Tokenised Custody Platforms. This categorization aims to create a level playing field and align Australia’s regulatory approach with international standards from jurisdictions like the European Union and the United Kingdom.
The consultation period for this exposure draft closed on October 24, 2025, with implementation potentially commencing later this year. Once effective, crypto businesses will have six months to initiate registration and twelve months to complete licensing processes. However, this compliance comes with significant costs, estimated to range between $100,000 and $500,000 for establishing a compliant exchange. Ongoing costs for audits and reporting systems will likely drive smaller companies to either merge with larger firms or exit the market entirely.
CEO of OKX Australia, Kate Cooper, remarked that this legislation signifies a critical moment for crypto, indicating that it is no longer on the fringes but is fully integrated into the financial system. The urgency of these reforms reflects a global trend towards better regulation in the digital asset space, aiming to enhance investor confidence and market integrity.
The framework also allows for new ministerial powers to designate facilities as financial markets or clearing and settlement facilities, which will adapt as technologies evolve. As the connection between crypto-assets and traditional finance grows, the Treasury’s reforms are designed to ensure adequate transparency and accountability.
With ASIC’s ongoing support for innovation, recent exemptions for Project Acacia allow for real-world testing of tokenized asset transactions, balancing the need for innovation with necessary regulatory safeguards. These measures aim to foster a safe environment for digital asset innovation while protecting consumers from potential risks associated with the sector.
Stay tuned for more updates as Australia’s digital asset regulatory landscape rapidly evolves. The time to act is now, and the implications of these changes will be felt across the globe!
