Australia Proposes Stricter Licensing for Crypto Platforms

Australia is moving to tighten regulation of digital assets, with the government releasing draft legislation that would bring crypto exchanges and custody providers under a licensing regime similar to traditional finance.

The proposed rules would require exchanges to obtain an Australian Financial Services License (AFSL), placing them under the supervision of the Australian Securities and Investments Commission (ASIC). Platforms would have to meet standards on custody, settlement, and disclosure. Penalties for breaches could reach AUD 16.5 million, depending on the scale of violations.

The legislation goes beyond existing requirements, which only obligate exchanges handling major assets like Bitcoin to register with AUSTRAC. Under the draft, all operators—regardless of size—would need authorization, though exemptions would be available for low-risk firms. Platforms handling less than AUD 5,000 per customer and under AUD 10 million annually could avoid full licensing obligations.

Treasury officials said the thresholds were designed to align with existing financial product rules and avoid overburdening smaller players.

The reforms also come alongside new rules introduced earlier this year for crypto ATMs. AUSTRAC set transaction limits of AUD 5,000 per day, introduced stricter identity checks, and mandated scam warnings. Regulators said they expect exchanges to adopt similar standards if they handle cash transactions.

While regulators are tightening oversight, there is also a push to simplify Australia's overall financial rulebook. ASIC recently removed more than 9,000 pages of guidance in an effort to streamline compliance, consolidate legal instruments, and transition to digital processes. Officials say the goal is to reduce complexity while ensuring investor protections keep pace with technological change.

Australia's regulatory push mirrors global trends as governments attempt to address risks posed by digital assets without stifling innovation.