Crypto exchanges operating in Australia could soon be required to obtain a financial services licence under new government proposals.
Australia has published draft legislation that would force cryptocurrency exchanges to obtain financial services licences and comply with stricter operating standards. Rules breaches could lead to fines of up to A$16.5 million or 10% of annual turnover.
The proposal, released by the Australian Treasury, brings digital asset platforms and tokenised custody providers under the Corporations Act. This would bring together crypto regulation with existing rules that already apply to traditional financial services.
Officials say the reforms balance innovation with security, with assistant treasurer Daniel Mulino saying it would help support legitimate firms while shutting down unscrupulous actors. He argued the framework gives businesses clarity and consumers confidence about digital asset markets.
The proposal follows years of warnings from watchdogs about rising retail exposure to risky crypto products. Agencies including AUSTRAC and the tax office have pushed for tighter oversight. Regulators want to protect investors from risks highlighted by the collapse of FTX, which trapped 30,000 Australians.
What would the proposed crypto regulation contain?
Under the planned new bill, exchanges must demonstrate that they operate efficiently, honestly and fairly, while also avoiding misleading conduct or unfair contract terms. Authorities believe that the changes are a necessary way of strengthening consumer protections in an increasingly volatile market.
Under the draft rules, certain smaller operators will be eligible for exemptions. Platforms holding less than A$5,000 per customer or processing under A$10 million annually will not need to apply for full licences.
The framework itself does not regulate individual crypto tokens used for gaming or non-financial purposes. Instead, the Australian government has chosen to focus on regulation of exchanges and custody providers themselves.
What has been the reaction to the plans?
Several large and more established exchanges have expressed support for the move, including Coinbase and Independent Reserve. John O’Loghlen, Coinbase’s Asia-Pacific head described it as a “meaningful step” that could boost trust and global competitiveness.
“Clear, fit-for-purpose regulation will support economic growth, increase choice for consumers, and ensure Australia remains competitive globally,” he said.
Many Jiang of CloudTech Group described the proposal as a “defining moment” for mainstream adoption and ongoing investment. She noted how the country’s crypto sector has long been “constrained by regulatory uncertainty” up until this point.
ASIC plans stablecoin exemptions
Elsewhere, the Australian Securities and Investments Commission (ASIC) is also expanding exemptions for stablecoins, including AUDF issued by Forte Securities Australia. Forte has also joined the central bank’s pilot project, Project Acacia.
ASIC recently licensed two Australian dollar stablecoins, AUDM and AUDF, under existing rules. Added to this, Coinbase has announced plans to list another stablecoin, AUDD, for local customers. AUSTRAC also ordered Binance’s local arm to appoint an external auditor over concerns about money laundering and terrorism financing.
Calls for greater crypto regulation have grown within Australia, with authorities emphasising the need for strong investor safeguards. Should this new proposed legislation be introduced, legal experts believe the legislation may trigger a wave of consolidation across the industry in the months and years ahead.
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