Australia’s Treasury announced Thursday that crypto exchanges and other digital asset platforms will soon be required to obtain an Australian Financial Services License (AFSL) and comply with strict new conditions. Companies that breach these requirements could face penalties of up to 10% of their annual revenue.
The Australian Transaction Reports and Analysis Centre’s data shows roughly 400 crypto exchanges registered with the Australian watchdog, the Australian Securities and Investments Commission, but only a fraction are actively operating.
Mulino says the licensing framework will support the growth of the crypto industry
In a consultation, the Treasury said the draft legislation would change the Corporations Act 2001 to “capture digital asset platforms and tokenized custody platforms by introducing each as a new financial product.”
Presently, anti-money laundering and know-your-customer rules are the only requirements for crypto platforms in Australia. However, the new proposed laws will extend oversight by requiring AFSL registration.
The penalties for violations, including dishonest or deceptive conduct, would also be set at whichever is greater: A$16.5 million, three times the advantage gained, or 10% of yearly sales. Nonetheless, the rules can still be altered, with industry participants allowed to comment on the draft until October 24.
In the past few months, the nation’s key regulators, including financial regulators, the tax authority, and the central bank, have cautioned against Australians’ rising exposure to crypto assets. In August, AUSTRAC even ordered Binance Australia to appoint an external auditor over compliance concerns.
So far, the Treasury has claimed that the planned rules will enhance the protection of crypto consumers. Federal Assistant Treasurer Daniel Mulino stated that the reforms are meant to nurture the sector while shielding Australians from potential losses, stressing that regulation will give investors more confidence in digital assets. He noted, “It is about legitimising the good actors and shutting out the bad.”
John O’Loghlen, Australian Country Director and APAC Managing Director of Coinbase also commented: “Clear, fit-for-purpose regulation will support economic growth, increase choice for consumers, and ensure Australia remains competitive globally.We look forward to working constructively with government and industry as the legislation progresses.”
Moreover, Jonathon Miller, general manager at Kraken, noted that he was pleased to see the draft finally published after a thorough collaboration period between industry players and regulators.
The Australian government is planning on instituting stablecoin licensing rules
According to the federal government, the legislation excludes digital asset creators and firms using crypto for non-financial activities. That means tokens used in video games and artistic NFTs remain outside the scope of regulation.
It also noted that tokens that function as financial products will fall under current regulations, and ASIC is set to clarify in November which tokens will need an AFSL. Moreover, smaller platforms that process under $10 million in transactions yearly and hold under $5,000 per client will be exempt.
Meanwhile, the country’s authorities are also working on a comprehensive payments licensing regime to cover digital assets such as stablecoins. The Australian Prudential Regulation Authority (APRA) may oversee stablecoin issuers once the new “stored-value facilities” framework is implemented.
The ASIC has also recently licensed two Australian dollar–backed stablecoins, AUDM from Macropod and AUDF from Forte, classifying them as non-cash payment facilities. Adding to the momentum, Coinbase announced Wednesday that it will add support for a third Australian dollar stablecoin, AUDD, enabling local users to buy, sell, convert, and transfer it.
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