Australian cryptocurrency investors will gain new protections under draft laws requiring digital asset sellers to hold an Australian Financial Services Licence (AFSL).
Consultation on the new exposure draft of the Treasury Laws Amendment Bill 2025: Digital Asset, and Tokenised Custody, Platforms, which will run through 24 October, is the fourth step in Treasury’s ongoing work to identify the best regulatory regime for digital assets.
Previous consultations rejected a separate ‘digital asset’ category, recommending new rules fit within existing financial services law instead.
These new products – to be known as ‘digital asset platforms’ and ‘tokenised custody platforms’ – would be regulated within the existing Corporations Act 2001, with providers of those products required to hold an AFS Licence like any other financial services business.
AFS Licence holders face a range of obligations in areas like conduct and disclosure; competence, knowledge, skills, and training of managers; managing conflicts of interest; risk management; dispute resolution and compensation arrangements; and more.
Companies selling cryptocurrency or other digital assets – including commodity-like or collectable assets like Bitcoin or NFTs, and bearer-like assets such as stablecoins or tokenised securities – face penalties of $16.5 million or more for breaches under the proposed laws.
Smaller, “low-risk” platforms with less than $5,000 per customer and $10 million in transactions per year, will be exempt from the new regulations.
The legislation “is about legitimising the good actors and shutting out the bad,” Assistant Treasurer and Minister for Financial Services Daniel Mulino said in issuing the draft legislation, as well as “giving businesses certainty and giving consumers confidence.”
Normalising digital asset rules globally
Treasury has designed the draft legislation to align with similar efforts in the UK – which introduced new crypto asset rules in April after noting 12 per cent of UK adults now own crypto – and EU, whose Markets in Crypto-Assets (MiCA) Regulation came into force in 2023.
US President Donald Trump has also moved quickly to regulate digital assets, with the so-called GENIUS Act signed into law in July with new requirements around reserve backing, transparency, regulatory consistency, and “a final backstop of consumer protection”.
Crypto operators welcomed the draft laws, with Crypto.com general manager Vakul Talwar calling the guidelines “long overdue” and a “turning point”, welcoming Treasury’s proposed structure as “demonstrat[ing] a clear understanding of the sector’s needs.”
The new rules governing crypto exhanges have been welcomed by operators. Photo: Shutterstock
Its approach “is more efficient” than new laws, he said, “building on established regulatory infrastructure and expertise while avoiding unnecessary complexity and cost [that] would have stifled innovation and driven firms offshore and away from the Australian market.”
Binance ANZ general manager Matt Poblocki agreed, saying “robust licensing and regulation improves consumer confidence, ensures user protection, and bolsters industry credibility… This is crucial to ensuring Australia remains competitive and at the forefront of innovation.”
In crypto’s Wild West, there’s a new sheriff in town
The new measures are a concerted effort to stem the flow of money from well-intentioned investors to scammers and exploitative operators, which have taken billions from investors who have often lost their investments because they had no legal recourse.
A recent Comsure analysis noted at least 17 major crypto exchange bankruptcies since 2009, with total losses of up to $76 billion ($US50 billion) fuelled by disasters like the collapse of onetime market giant FTX and the February theft of $2.4 billion of digital assets from Bybit.
In a famous 2021 ‘rug pull’, the founder of Turkish cryptocurrency exchange Thodex disappeared after taking $2.6 billion worth of assets while the 2019 death of Quadriga CX’s founder left $263 million (CAD$250 million) of invested funds inaccessible.
And last year, ASIC fined the Kraken crypto exchange $8 million for “unlawfully” targeting investors – many of whom lost millions – while Swyftx was bracing for “black swan type events” after FTX’s collapse, which wiped out $300 billion ($US200 billion) of value.
All told, Comsure found, 3.7 million of the nearly 7 million cryptocurrencies launched since 2021 have stopped trading or been abandoned – including 1.8 million in the first quarter of this year alone – due to lack of use cases, poor security, rug pulls, and market volatility.
More than $3.3 billion ($US2.17 billion) was stolen from crypto firms in the first half of 2025 alone, Chainalysis recently reported, with individual users’ wallets comprising 23.35 per cent of all stolen fund activity.
“Repeated failures of major platforms, both overseas and in Australia, show the need for stronger safeguards to protect consumers and ensure market integrity,” Treasury noted in an explainer on the rules, noting that Australians have invested billions into such digital assets.
It warned that “custodial arrangements”, in which clients transfer assets to an intermediary like a crypto exchange, “are a key source of risk” – including credit, liquidity, counterparty, operational, fraud and cyber risk – with failures causing “major losses for consumers”.
