Australia has taken a decisive step toward tighter oversight of its digital asset sector, as a key Senate committee endorsed legislation that would bring cryptocurrency platforms and custodial services under the country’s financial services regime.
The Senate Economics Legislation Committee has recommended that the proposed Corporations Amendment (Digital Assets Framework) Bill 2025 proceed to a full Senate vote, signaling strong institutional support for a more structured approach to crypto regulation.
If passed, the law would require many crypto exchanges and custody providers to obtain an Australian Financial Services License (AFSL) and comply with rules similar to those governing traditional financial institutions.
Key Takeaways
- Australia’s Senate committee has endorsed a bill that would require crypto platforms and custodians to operate under existing financial services laws.
- The proposed framework mandates that most operators holding client assets obtain an Australian Financial Services License and meet strict custody and disclosure standards.
- The legislation aims to close regulatory gaps that have allowed some crypto firms to manage customer funds without adequate safeguards.
- Industry participants support the move for regulatory clarity but warn that broad definitions could unintentionally capture non-custodial technology providers.
- If passed, the bill will introduce a six-month transition period and could reshape Australia’s crypto market by increasing compliance requirements and investor protection.
A Shift Toward Formal Regulation
The proposed framework aims to close longstanding regulatory gaps that have allowed some digital asset businesses to operate without the safeguards required in mainstream finance. Lawmakers argue that as the crypto market expands, clearer rules are necessary to protect consumers and ensure market integrity.
“The bill represents a step toward modernizing oversight of digital assets,” the Senate committee noted, emphasizing the need to address uneven regulation across the sector.
Under the legislation, digital asset platforms (DAPs) and tokenized custody platforms (TCPs) would be treated as financial products. This classification brings them directly within the scope of existing financial services laws, rather than creating an entirely separate crypto-specific regime.
What the Bill Requires
At the heart of the proposal is a licensing requirement. Crypto businesses that hold or manage customer assets would generally need to secure an AFSL to continue operating legally in Australia.
Alongside licensing, the framework introduces several key obligations:
- Safeguarding customer assets through strict custody standards
- Providing clear disclosures, especially for retail investors
- Meeting financial and governance requirements
- Complying with conduct rules tailored to digital asset platforms
The intention is to reduce risks such as insolvency, misuse of funds, and lack of transparency—issues that have plagued the global crypto industry in recent years.
Transition Period and Scope
If enacted, the law would include a six-month transition period for companies that do not already hold an AFSL. This window is designed to give existing operators time to adapt their systems, compliance structures, and governance models.
Not all players would be affected equally. Smaller providers with annual transaction volumes below 10 million Australian dollars are expected to be exempt, along with certain blockchain infrastructure providers that do not directly control customer assets.
The framework also focuses on intermediaries rather than the underlying technology. By targeting businesses that handle client funds, regulators aim to avoid stifling innovation in blockchain development itself.
Industry: Support and Concerns
The response from industry participants has been broadly positive, though not without reservations.
Coinbase’s regional leadership welcomed the move as a milestone for Australia’s digital economy, highlighting the importance of regulatory clarity in attracting investment and fostering growth.
“This is an important step for Australia’s standing in the global digital economy,” said a senior executive from Coinbase’s Asia-Pacific operations.
However, concerns remain about unintended consequences. Some industry groups argue that the bill’s definitions—particularly around “digital tokens” and “factual control”—could be too broad.
Legal experts and technology firms warn that certain non-custodial services, such as wallet providers or multi-party computation (MPC) systems, might be mistakenly classified as custodians under a strict interpretation of the rules.
Ripple Labs echoed similar concerns, urging lawmakers to refine the definition of control so that only entities capable of independently moving assets are subject to full regulatory obligations.
The committee acknowledged these issues but opted not to revise the core definitions at this stage, indicating that further clarification could come through secondary regulations.
Building on Existing Oversight
Australia is not starting from scratch. Crypto exchanges in the country are already required to register with AUSTRAC for anti-money laundering and counter-terrorism financing compliance.
The new bill builds on that foundation by introducing a broader licensing and conduct framework. It reflects a global trend, with jurisdictions such as the European Union, Singapore, and Japan implementing similar rules to bring crypto closer to traditional finance.
Australia’s approach, however, is notable for integrating digital assets into existing laws rather than creating a standalone regime. This could simplify enforcement and reduce regulatory fragmentation.
Implications for the Market
For crypto firms, the new requirements will likely increase operational costs. Companies will need to invest in compliance systems, legal expertise, and financial reporting structures to meet licensing standards.
Some analysts expect consolidation in the sector, as smaller players may struggle to meet the new thresholds. Larger, well-capitalized firms could benefit from reduced competition and increased trust among users.
For consumers, the changes are expected to enhance protection. Measures such as asset segregation, disclosure requirements, and regulatory oversight aim to reduce the risk of losing funds due to platform failures or misconduct.
The collapse of major global exchanges in recent years has underscored the importance of such safeguards, influencing policymakers worldwide.
What Comes Next
With the committee’s backing secured, the bill now moves to the Senate for debate and a final vote. While there may be amendments along the way, the core principles appear to have broad political support.
If passed, Australia would establish one of the more comprehensive regulatory frameworks for digital asset platforms in the region. The move could strengthen its position as a credible and well-regulated crypto market, potentially attracting institutional investors seeking clarity and stability.
At the same time, the success of the framework will depend on how effectively regulators balance oversight with innovation. Too much rigidity could push activity offshore, while insufficient clarity could leave risks unaddressed.
For now, the Senate’s endorsement marks a significant turning point—one that brings Australia closer to aligning its crypto industry with the standards of traditional finance while attempting to preserve the sector’s capacity for growth.
