Australia Moves To Right Past Crypto Wrongs
The Australian government has introduced a new Digital Asset Bill to address the shortfall in digital asset regulation The country’s cryptocurrency sector has lacked regulatory clarity for quite some time and with the introduction of a new bill aimed at modernising the financial system and protecting consumers.
The proposed Corporations Amendment (Digital Assets Framework) Bill 2025 will bring digital asset platforms under the same licensing and oversight as traditional financial institutions, a move that could help prevent future collapses like those of FTX and Celsius Network.
Why Closing the Regulatory Gap Is Important
Cryptocurrency and other digital assets inclusive of their platforms Crypto and other [digital assets]( platforms in Australia operated in a sort of grey area. Platform operators were often unregulated or unevenly regulated and this leaves investors vulnerable if anything went wrong (which as we know often does). The new draft legislation aims to end that uncertainty by amending the Corporations Act 2001 by establishing legal clarity for “digital asset platforms” (DAPs) and “tokenised custody platforms” (TCPs) effectively expanding certain crypto services subject to the same laws as banks and financial institutions.
The current draft requires companies that hold crypto on behalf of consumers will need an Australian Securities & Investments Commission (ASIC) issued licence (an Australian Financial Services Licence, or AFSL). That means new disclosure, custody, reporting and compliance obligations designed to protect consumers.
Currently the legislation is not a one size fits all clampdown and is mindful in not preventing innovation and avoid throttling small, low risk operators the bill includes multiple exemptions. Platforms holding less than AUD 5,000 per customer and handling under AUD 10 million in transactions per year may apply for an exemption which is a recognition that not all crypto businesses pose the same risk.
Australia Moves To Prevent Ongoing Losses and Protect Australian's
The reform comes in the wake of a wave of high profile collapses in the Decentralised Finance (DeFi) sector which has seen billions of dollars lost by consumers including the use of North Korean State Owned Hacker groups targeting the sector to bypass financial sanctions.
Many of the collapses are triggered by risky financial practices, misappropriation of customer funds and conflicts of interest between projects and owners which continue to wipe out billions and leave millions of users around the world unable to recover their assets.
When platforms are allowed to operate outside regulated frameworks, user funds are at risk. The new bill directly addresses this by forcing operators holding others’ assets (finances) to comply with legal and enforceable standards.
What the Bill Does And What It Means for Crypto Users
Defines DAPs and TCPs as regulated financial services: The bill formally brings crypto trading platforms and custody providers under the scope of the Corporations Act.
AFSL licensing requirement: Platforms will need to apply for and obtain an AFSL to operate legally similar to banks or brokering firms.
Tailored regulation and exemptions: The law recognises that not all platforms are equal and gives exemptions to small, low risk services (small customer balances and low transaction volumes).
Consumer protection and transparency: With regulation comes greater oversight: custody obligations, audit and disclosure requirements, and regulatory supervision under ASIC and the relevant minister.
For you, your family, and everyday Australians this means your crypto holdings could become safer. It reduces the risk that a platform will disappear overnight or misuse your funds and gives you legal recourse in case of mismanagement.
Well done Dr Mulino.
image sources provided supplemented by Canva Pro Subscription. This is not financial advice and readers are advised to undertake their own research or seek professional financial services.