Australia plans crypto regulation with new licensing rules

Australia's government has outlined a plan to regulate crypto exchanges under existing financial services laws while also addressing concerns over debanking.  

In a March 21 statement, the Treasury announced that digital asset platforms offering exchange and custody services will be subject to compliance requirements similar to traditional financial firms.

These include safeguarding customer assets, obtaining an Australian Financial Services Licence, and meeting capital requirements.  

“Our legislative reforms will extend existing financial services laws to key digital asset platforms, but not to all of the digital asset ecosystem,” the Treasury stated.  

Smaller platforms and blockchain developers that do not meet specific size thresholds will be exempt.

Meanwhile, certain stablecoins and wrapped tokens will not be classified as financial products, meaning platforms trading them will not be considered as operating financial markets.  

The government also pledged to work with Australia’s four largest banks to examine the impact of debanking.

Additionally, a review into a central bank digital currency and an Enhanced Regulatory Sandbox for testing financial products is planned for 2025.  

With a federal election expected by May 17, the political landscape could influence the regulation’s future. Opposition leader Peter Dutton’s Coalition has previously stated it would prioritize crypto regulations if elected.  

A YouGov poll published on March 20 shows a tight race between the ruling Labor Party and the opposition.  

Caroline Bowler, CEO of BTC Markets, called the proposed reforms “sensible” but noted that more details are needed on capital and custody requirements.  

Kraken Australia's managing director Jonathon Miller highlighted the “urgent need for bespoke crypto legislation” to reduce industry uncertainty and resolve issues like debanking.