Australia is preparing a major overhaul of cryptocurrency market regulation. The Treasury has published a draft law that would require exchanges and other digital asset service providers to obtain an Australian Financial Services License (AFS license). Public consultation is open until October 24, 2025.

New framework for crypto firms

The proposed amendment to the Corporations Act 2001 would classify digital asset platforms (DAPs, i.e., cryptocurrency exchanges and trading platforms) and tokenized custody platforms (TCPs, services managing tokenized assets such as real estate in digital form) as new financial products. This would automatically subject them to licensing and consumer protection requirements.

“The framework targets businesses that hold assets on behalf of clients, not the digital assets themselves,” the Treasury stated. Cryptocurrencies already fall under existing legal frameworks and are treated like other assets.

Response to market failures

The main goal of the changes is to strengthen investor protection. “Despite existing legal and regulatory measures, collapses of digital intermediaries have caused significant losses for consumers, including those in Australia,” the proposal notes.

DAPs cover crypto exchanges and trading platforms, while TCPs include tokenized physical assets such as gold, real estate, or art. They would now fall under the same framework as portfolio managers.

Regulatory oversight shifts to ASIC

Licensing would fall under the Australian Securities and Investments Commission (ASIC), which already oversees financial services. ASIC would also begin issuing licenses for crypto companies.

Assistant Treasurer Daniel Mulino emphasized that the goal is to expand existing legislation in a “targeted way.”

What changes compared to today?

Currently, crypto exchanges in Australia must only comply with AML/KYC rules (Anti-Money Laundering and Know Your Customer). If passed, the legislation would bring crypto platforms under stricter requirements, similar to traditional financial intermediaries.

Ironically, while regulation is set to tighten, ASIC recently granted an exemption for stablecoins. Licensed intermediaries can now offer them without additional approvals.

Sources:

https://consult.treasury.gov.au/c2025-701519

https://storage.googleapis.com/files-au-treasury/treasury/p/prj37f059c66284c24051948/page/c2025_701519_fs.pdf

https://www.capitalbrief.com/article/treasury-releases-draft-legislation-for-crypto-bill-5505257a-728a-402b-b7dd-4ca2b0fe3d98/

https://www.afr.com/companies/financial-services/crypto-exchanges-to-be-required-to-hold-financial-services-licences-20250924-p5mxqd

https://www.theblock.co/post/371205/australia-eases-licensing-rules-for-stablecoin-intermediaries