Australia has taken a significant step forward in cryptocurrency regulation, with a bill aimed at establishing a regulatory framework for digital asset platforms securing support from the Senate.
At the heart of the legislation is the requirement for crypto exchanges and tokenization platforms operating in the country to comply with existing financial services laws, marking a substantial shift in how digital assets are regulated.
Regulators at the Australian Securities and Investments Commission (ASIC) have stated that cryptocurrency should be regulated based on its economic function, rather than its technological label.
Industry groups have cautioned that the bill's definitions could inadvertently encompass infrastructure providers like wallet software and multi-party computation (MPC) systems.
New Licensing Framework for Digital Asset Platforms
The bill, introduced by Assistant Treasurer and Minister for Financial Services, Daniel Mookhey, in November 2025, aims to create a dedicated regulatory structure for what it terms Digital Asset Platforms (DAPs) and Tokenised Custodial Platforms (TCPs).
Under the proposal, these platforms would be treated as financial products under the Corporations Act and the ASIC Act. Consequently, most centralized crypto exchanges and custodial providers holding customer assets would need to obtain an Australian Financial Services Licence (AFSL).
Licensed platforms would be mandated to adhere to a range of operational standards, including custody safeguards, settlement procedures, and governance requirements as determined by ASIC.
They would also need to comply with tailored disclosure rules when dealing with retail investors, ensuring customers receive clearer information regarding risks, asset custody, and platform operations.
However, the bill includes exemptions for smaller service providers. Platforms with annual transaction volumes below AUD 10 million (approximately USD 7 million), along with certain public blockchain infrastructure providers, would be exempt from the same licensing requirements.
Lawmakers have stated their objective is to strike a balance between protecting consumers and fostering innovation within the country's burgeoning digital asset sector.
ASIC Pushes for 'Function Over Technology' Approach
Comments from ASIC reflect its view that crypto firms should not receive special treatment simply because they rely on blockchain technology.
Instead, the regulator believes that companies providing financial services – such as custody, trading, or settlement – should adhere to existing financial rules, regardless of whether they operate through traditional banking infrastructure or decentralized networks.
This approach represents a departure from earlier industry sentiments that digital assets necessitated an entirely new regulatory framework.
Industry Groups Raise Concerns Over Broad Definitions
While the Senate committee has supported the bill, some industry participants have warned that the current wording could lead to unintended consequences.
Legal experts and technology firms have expressed concerns about the bill's broad definitions, arguing that it could impose unnecessary burdens on infrastructure providers who do not directly interact with customers, such as wallet providers, hardware security modules, and multi-party computation systems.
If these companies are also classified as digital asset platforms, they might be required to obtain licenses and comply with the same stringent regulations as custodial exchanges, even if they never control customer funds.