Australia Proposes New Licensing for Digital Asset Platforms and Custodians ∞ Regulation

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Briefing

Australia has introduced draft legislation to extend financial services laws to digital asset businesses, requiring “digital asset platforms” and “tokenized custody platforms” to obtain an Australian Financial Services License. This action, a cornerstone of the Albanese Government’s digital asset roadmap, aims to standardize crypto exchange regulation, enhance consumer protection, and mitigate risks associated with client asset holdings, with a feedback period open until October 24 for final shaping.

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Context

Prior to this draft legislation, Australia’s digital asset landscape operated with a degree of legal ambiguity, particularly concerning the classification and oversight of crypto exchanges and custody services. Only exchanges dealing with traditional “financial products” like derivatives were mandated to register with the Australian Securities and Investments Commission (ASIC), creating an inconsistent regulatory environment. This framework presented a compliance challenge for businesses navigating disparate rules and left consumers exposed to risks from platforms lacking adequate safeguards for digital asset holdings.

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Analysis

This regulatory action fundamentally alters the operational and compliance frameworks for digital asset businesses in Australia. Entities operating “digital asset platforms” or “tokenized custody platforms” must now secure an Australian Financial Services License, aligning their operations with established financial sector standards. This necessitates significant updates to internal control systems, risk management protocols, and client asset segregation practices. The legislation’s focus on activities like wrapped tokens and staking also requires firms to re-evaluate product structuring and disclosure mechanisms to ensure adherence to the new, explicit compliance requirements.

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Parameters

Jurisdiction ∞ Australia
Regulating Authority ∞ Australian Government (Assistant Treasurer Daniel Mulino), Australian Securities and Investments Commission (ASIC)
Legal Instrument ∞ Draft Legislation (under the Corporations Act)
Targeted Entities ∞ Digital asset platforms, tokenized custody platforms, crypto service providers
Key Requirement ∞ Australian Financial Services License (AFSL)
Activities Covered ∞ Wrapped tokens, public token infrastructure, staking
Penalties ∞ Up to AUD 16.5 million or three times benefit obtained
Exemptions ∞ Low-risk platforms (
Feedback Deadline ∞ October 24

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Outlook

The next phase involves a public feedback period until October 24, which will shape the final form of this legislation, potentially leading to refinements based on industry input. This move sets a significant precedent for other jurisdictions contemplating comprehensive digital asset regulation, signaling a global trend towards integrating crypto services within existing financial services frameworks. The action is poised to foster greater institutional participation by enhancing market integrity and investor confidence, while simultaneously posing a strategic challenge for smaller innovators to adapt without stifling competition.

This Australian draft legislation marks a pivotal maturation point for digital asset regulation, mandating robust financial services compliance essential for long-term market legitimacy and investor protection.

Signal Acquired from ∞ coincentral.com