Australia Moves Toward Comprehensive Crypto Regulation with New Framework

The government aims to provide clear guidelines that will foster growth while ensuring stability in the rapidly evolving space.

Under the proposed framework, cryptocurrency firms such as exchanges, custodians, and stablecoin issuers will be required to obtain an Australian Financial Services License (AFSL) to operate. These businesses will also face new rules tailored specifically to digital assets, which aim to address potential issues such as liquidity, fraud, and cybersecurity risks. Companies dealing with tokenized products, like stablecoins, will be subject to stringent safeguards, including rules around customer asset protection and liquidity management.

However, not every crypto-related entity will be affected by these regulations. Startups that don’t meet certain thresholds, as well as developers working on non-financial blockchain projects and decentralized protocols, will be exempt from the framework. Despite this, smaller firms may still need to follow some basic compliance guidelines.

The government also plans to tackle broader issues impacting the crypto space, such as debanking, which has disrupted several crypto businesses in Australia. Officials recognize that debanking can hinder competition and innovation within the financial sector. Alongside these efforts, there are ongoing discussions about the potential for a Central Bank Digital Currency (CBDC) and new tokenization laws to help reshape the financial landscape.

A draft version of the regulations is expected to be released for public consultation later this year, with input from the Australian Securities and Investments Commission (ASIC) to refine the final rules. Meanwhile, the Enhanced Regulatory Sandbox will be reviewed in 2025, offering firms an opportunity to test financial services innovations without needing a formal license.