Australia is preparing to introduce one of its most comprehensive regulatory frameworks for digital assets, signaling a shift away from what officials describe as the “Wild West” phase of crypto markets. The Senate Economics Legislation Committee has backed the Corporations Amendment (Digital Assets Framework) Bill 2025, which would bring cryptocurrency exchanges and tokenized custody platforms under formal supervision. If implemented, the legislation would require major digital asset businesses operating in Australia to obtain an Australian Financial Services Licence (AFSL) and comply with oversight from the Australian Securities and Investments Commission.
The proposed rules aim to integrate crypto services into the country’s broader financial regulatory system. Under the framework, digital asset platforms and tokenized custody providers would be classified as financial service providers. This classification would require them to meet compliance standards similar to those applied to traditional financial institutions. Regulators say the move is designed to improve consumer protection, enhance transparency for investors and strengthen trust in the country’s digital finance ecosystem.
A central element of the bill is the introduction of a tiered regulatory approach based on transaction size. Platforms processing less than 10 million Australian dollars in annual transactions, roughly 7 million U.S. dollars, may qualify for exemptions from the most stringent licensing obligations. Officials say this threshold is intended to support innovation and protect smaller blockchain startups from excessive regulatory burdens while ensuring that larger platforms operate under stricter oversight.
For platforms that exceed the threshold, compliance requirements would become significantly more demanding. These companies would need to meet custody and settlement standards enforced by the Australian Securities and Investments Commission. The rules would also require clearer disclosures for retail investors, providing detailed information about risks associated with digital assets and tokenized products in a manner similar to traditional financial markets.
Despite broad support for clearer regulations, parts of the crypto industry have raised concerns about certain definitions included in the bill. Legal experts and blockchain firms argue that some terms used in the proposed legislation could be interpreted too broadly. In particular, debate has centered on the definitions of “digital token” and “factual control,” which may determine who is considered legally responsible for holding or managing crypto assets.
One concern involves the treatment of wallet infrastructure providers that rely on multi-party computation technology. In these systems, private keys are divided into fragments known as shards and distributed across different parties. Some industry participants argue that holding only a fragment of a key should not automatically classify a service provider as a regulated custodian. Critics warn that if the law interprets these roles too broadly, software developers and infrastructure providers could face regulatory obligations intended for full custodians.
Others in the industry support the focus on the concept of control. Supporters argue that using control as a legal standard can clarify responsibility when assets are lost or mismanaged. Some blockchain companies believe this approach would strengthen accountability in digital asset markets while reducing confusion about which entities are responsible for safeguarding customer funds.
The proposed framework is part of Australia’s broader strategy to position itself as a competitive hub for digital finance while maintaining strong regulatory safeguards. Authorities have emphasized the importance of balancing innovation with investor protection as cryptocurrency markets continue expanding globally. The legislation could significantly reshape the country’s crypto industry by bringing major exchanges and infrastructure providers into a regulated financial environment.
At the same time, industry leaders say regulatory clarity alone will not fully address the challenges facing Australia’s digital asset sector. Many companies continue to struggle with access to banking services, a problem that has affected crypto businesses in several jurisdictions. Observers say cooperation between regulators and financial institutions will be essential to ensure the new framework supports growth rather than restricting innovation.
