Australia Passes Stricter Law for Crypto Exchange

Australia is moving to tighten oversight of the digital asset sector, unveiling draft legislation regulating crypto exchanges in line with existing financial services laws.

Overview

Assistant Treasurer Daniel Mulino introduced the proposal at a crypto industry event on Thursday, calling it “the cornerstone of our digital asset roadmap.” The Albanese government first outlined the roadmap in March this year.

Mulino stressed that the draft is still in its early stages and that the government is actively seeking industry feedback before finalising it.

Crypto exchanges must only register with AUSTRAC, the country’s anti-money laundering regulator. While over 400 platforms are listed, many are inactive.

Defining New Products Under the Law

The legislation would introduce two new classes of financial products under the Corporations Act: digital asset platforms and tokenised custody platforms.

If passed, providers of these services would be required to obtain an Australian Financial Services Licence (AFSL) and be supervised by the Australian Securities and Investments Commission (ASIC). Only exchanges offering derivatives or other financial instruments fall under ASIC’s remit.

Daniel Mulino virtually addressed the Global Digital Asset Regulatory Summit on Thursday. 

Mulino explained that the bill also sets targeted rules for specific activities such as wrapped tokens, staking, and public token infrastructure. New standards will apply to the custody of crypto assets and how transactions are settled.

“Recent failures of digital asset businesses have underscored the risks to consumers, particularly when client funds are pooled and handled without adequate safeguards,” Mulino said. “This framework is about weeding out bad actors while giving compliant businesses certainty and consumers greater confidence.”

Penalties and Exemptions

The proposed law carries stiff penalties. Breaches could result in fines of up to AU$16.5 million (US$10.8 million), three times the profit gained, or 10% of annual turnover – whichever is greater.

However, smaller providers deemed “low risk” would be exempt. Platforms holding less than AU$5,000 (US$3,300) per customer and facilitating under AU$10 million (US$6.6 million) annually would not be subject to the new licensing rules.

The Treasury clarified that the exemption mirrors how other financial products, like non-cash payment systems, are treated. It also emphasised that the law won’t apply to crypto issuers or projects using tokens for purposes other than financial ones.

Industry Welcomes the Move

Australia’s major crypto players have welcomed mainly the draft framework.

• Swyftx CEO Jason Titman expected a licensing requirement and argued that the industry should embrace higher standards.
• OKX Australia CEO Kate Cooper noted that enforcement will be the real test, ensuring unlicensed competitors do not undermine compliant operators.
• Crypto.com’s Australia GM Vakul Talwar called the framework “long overdue,” praising its balance of consumer protection and innovation. He also commended the decision not to adopt ASIC’s earlier proposal for market operating licences, which he warned could have driven firms overseas.
• Kraken Australia’s managing director, Jonathon Miller, said the draft brings “greater certainty” for investors but stressed the importance of avoiding a rigid, one-size-fits-all model.

What’s Next

The Treasury has opened the draft for public consultation, with feedback accepted until October 24. After review, the government plans to refine the framework before introducing it in its final form.