Australia’s crypto laws win support, face clarity calls
Australia has proposed draft legislation to regulate digital asset platforms under its financial system. The consultation period ended on October 24, and feedback from industry stakeholders is under review. The regulations might change the nation’s approach to cryptocurrency regulation if they are passed and go into force by March 2026.
Overview of proposed regulation
Due to growing popularity and pressure from around the world for more precise regulations, Australia is taking action to regulate cryptocurrencies. Australian adults now use digital assets at a rate of 31 percent, up from 28 percent the previous year. With an emphasis on innovation and consumer protection, the Australian Treasury and ASIC are spearheading initiatives to incorporate crypto supervision into the financial system. Similar laws have already been enacted in nations like the US, Singapore, and the EU. The new law from Australia seeks to lessen risks like market volatility and fraud.
Key provisions of draft law
The proposed rule will bring cryptocurrency platforms into compliance with the same criteria as traditional financial institutions by requiring them to obtain an Australian Financial Services Licence (AFSL). Platforms with licenses must adhere to operational, financial, and consumer protection standards.
Crypto exchanges and custodians must hold an AFSL to operate legally in Australia. This measure is intended to improve compliance and consumer confidence by enforcing stricter oversight. Platforms are excluded from the license requirement if their yearly transactions are less than A$10 million ($6.5 million) or their consumer deposits total less than A$5,000 ($3,300). The purpose of this exemption is to lessen the regulatory burden on small-scale operations.
Penalties for non-compliance
Under the proposed law, crypto platforms that fail to meet licensing and conduct requirements may face penalties of up to A$16.5 million ($10.9 million) or 10 percent of their annual turnover, whichever is higher. The penalties are intended to enforce adherence to financial standards and regulatory requirements.
Industry response to draft law
The crypto industry has responded cautiously to the draft law. While there is general support for regulatory clarity, concerns remain over the lack of detailed guidance.
Swyftx supports the initiative but has called for simplification of the draft and clearer definitions, particularly around regulatory powers and access to offshore liquidity.
CloudTech Group sees the draft as progress but warns against leaving key decisions to ASIC without timely guidance. Executive Director Mandy Jiang also noted that current rules prevent licensed advisers from offering direct advice on cryptocurrencies, which could limit informed investment.
Crypto.com’s Vakul Talwar urged swift finalisation of the bill, suggesting it could be introduced by March 2026. In contrast, Edward Carroll of MHC Digital Group expects delays, citing the complexity of translating feedback into enforceable regulation.
Balancing innovation and regulation
Australia wants to encourage the development of cryptocurrencies while maintaining financial stability and consumer safety. Developing a legal framework that permits expansion while lowering risks like fraud and market disruption is the difficult part.
ASIC will be responsible for implementing the new laws, including licensing, compliance enforcement, and sector guidance. Its interpretation of the rules will significantly influence how the framework is applied in practice.
Outlook for crypto in Australia
More than 30 percent of Australian adults currently own or use digital assets, indicating the country’s growing cryptocurrency usage. Demand for regulated platforms and more transparent legal frameworks is being driven by this trend.
The regulatory framework may be implemented by March 2026, though delays into late 2026 or 2027 are possible. It is anticipated that the implementation of formal regulations will raise operational standards and legal clarity.
