Briefing
The Australian Government introduced the Corporations Amendment (Digital Assets Framework) Bill 2025, establishing a clear, enforceable regulatory perimeter for entities holding client digital assets. This legislative action immediately restructures the industry’s compliance architecture by mandating that “digital asset platforms” and “tokenised custody platforms” must now hold an Australian Financial Services Licence (AFSL), subjecting them to core financial services obligations like governance and risk controls. The most critical quantitative detail is the exemption threshold, which shields platforms holding less than $5,000 per customer and facilitating under $10 million in transactions annually from the full licensing burden.
Context
Prior to this Bill, the Australian regulatory landscape for digital assets was fragmented, with businesses able to hold unlimited client digital assets without the robust financial law safeguards applied to traditional finance. This legal ambiguity created a significant compliance challenge, exposing consumers to systemic risks like asset commingling and inadequate oversight, a vulnerability starkly highlighted by recent collapses in overseas markets. The lack of a specific licensing regime for custody and exchange functions constituted a major regulatory gap.
Analysis
This legislation is a profound operational shift, fundamentally altering compliance frameworks for all in-scope entities. The requirement to secure an AFSL mandates the immediate integration of robust governance, risk controls, and internal dispute resolution systems, mirroring the standards of traditional financial institutions. This chain of cause and effect means platforms must now implement client asset segregation and maintain strong financial responsibility, shifting the business model from unregulated technology provision to regulated financial service delivery. It is a critical update because it replaces voluntary best practices with statutory, enforceable duties, mitigating the systemic risk of client fund mismanagement.
Parameters
- AFSL Requirement → Mandates an Australian Financial Services Licence for in-scope digital asset and tokenized custody platforms.
- Exemption Threshold → $5,000/$10 Million → Platforms holding less than $5,000 per customer and facilitating under $10 million in transactions are exempt.
- Legislative Vehicle → Corporations Amendment Bill 2025 → The specific piece of legislation introduced to Parliament.
Outlook
The next phase involves the parliamentary process and subsequent development of specific regulatory technical standards (RTS) by the Australian Securities and Investments Commission (ASIC). This action sets a strong precedent for other jurisdictions, particularly in the Asia-Pacific region, by formally defining and regulating tokenized custody as a financial product. Potential second-order effects include market consolidation, as smaller entities may be unable to meet the AFSL capital and compliance requirements, leading to a flight of assets toward licensed, institutionally-backed platforms.
Verdict
This new legislative framework is a decisive step toward regulatory maturation, institutionalizing digital asset custody and irrevocably shifting the Australian market from an unregulated frontier to a governed financial sector.
