Author: Fintax
In November 2025, the Australian Minister for Finance and the Minister for Financial Services officially submitted the Corporations Amendment (Digital Assets Framework) Bill 2025 (hereinafter referred to as the "Digital Assets Framework Bill") to the Federal Parliament, intending to include "digital asset platforms" and "tokenized custody platforms" within the scope of the Corporations Act. Specifically, it aims to fully place cryptocurrency trading and custody businesses under the supervision of the Australian Securities and Investments Commission (ASIC) by relying on the Australian Financial Services License (AFSL) system.
This article argues that this move reflects Australia's intention to supplement the regulatory framework for cryptocurrency trading and custody businesses at the legislative level while maintaining the existing tone of "current tax law treatment of crypto assets." It marks Australia's further shift from a previous baseline regulatory model to a comprehensive financial regulatory model focused on platforms and custody. This article will systematically outline the core content of the Digital Assets Framework Bill and the shift in regulatory concepts it reflects, and further assess the potential impact of this legislation on the compliance costs, business models, and cross-border arrangements of cryptocurrency exchanges and custody institutions operating in Australia, thereby providing insights and references for industry practitioners and researchers.
1. Existing Regulatory Framework for Cryptocurrency Assets in Australia
Before the enactment of the "Digital Assets Framework Bill," Australia's regulatory system for cryptocurrency assets primarily consisted of three levels: tax regulation, anti-money laundering and counter-terrorism financing regulation (AML/CFT), and fragmented financial regulation.
In terms of tax regulation, Australia does not establish a new tax specifically for cryptocurrencies but prioritizes the application of existing general tax laws to all cryptocurrency transactions. In 2021, the Board of Taxation, in collaboration with several law firms, accounting firms, and other intermediaries, conducted a comprehensive review of the tax treatment of digital assets and related transactions in Australia, resulting in an assessment report on the taxation of cryptocurrency transactions in 2024. The report concluded that Australia's existing tax laws generally address the taxation issues of cryptocurrency assets and related transactions, a view subsequently recognized by the Australian Treasury, which also deemed it inappropriate to introduce special tax legislation for cryptocurrencies at this stage. Therefore, while acknowledging the uniqueness of cryptocurrencies, Australia's current tax laws will not introduce a "crypto tax" or large-scale special rules but will instead apply existing tax law rules.
In terms of AML/CFT regulation, Australia was one of the first countries to include digital currency exchange service providers (DCEs) within the AML/CFT regulatory framework. The 2018 amendments to the Australian Anti-Money Laundering and Counter-Terrorism Financing Act first brought DCEs into the regulatory scope. This amendment stipulated that any institution engaging in fiat and cryptocurrency exchange activities in Australia must register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) and fulfill obligations such as KYC, suspicious transaction reporting, and large transaction reporting. This regulation made the registration of DCEs a mandatory prerequisite, and this requirement remains one of the key components of Australia's AML/CFT regulation for digital assets.
In terms of fragmented financial regulation, existing Australian laws primarily use "whether the crypto business is similar to traditional financial products" as the main criterion for determining the applicability of financial regulatory laws: if a certain cryptocurrency essentially constitutes part of a security, derivative, or managed investment scheme, then related issuance, trading, and advisory activities will fall under the financial regulatory scope of ASIC; conversely, typical "pure cryptocurrencies" (such as Bitcoin and ETH) and trading platforms that do not involve derivatives are often not regarded as financial products or financial service providers and are not subject to relevant financial regulatory norms.
In summary, prior to the introduction of the "Digital Assets Framework Bill," Australia had initially established a multi-layered governance framework covering cryptocurrency assets through tax regulation, AML/CFT regulation, and fragmented financial regulation. If the "Digital Assets Framework Bill" is ultimately passed, it will further unify the legal applicability standards in the cryptocurrency asset field and clarify regulatory boundaries and obligations.
2. Proposed Regulatory Framework for Cryptocurrency Trading in the "Digital Assets Framework Bill"
The logic of the proposed Digital Assets Framework Bill can be briefly summarized as follows: first, define the platform, then treat the platform as a financial product, and finally impose further regulations on platform operators using the Australian Financial Services License (AFSL). At the same time, the content of the bill also reflects many attributes tailored to the cryptocurrency industry. Specifically:
First, it introduces two new types of financial products in the Corporations Act: Digital Asset Platform (DAP) and Tokenized Custody Platform (TCP). The Digital Asset Platform (DAP) refers to a "facility" where operators hold digital tokens on behalf of clients, with typical examples being centralized cryptocurrency exchanges and custodial wallet services. The key aspect of the Tokenized Custody Platform (TCP) lies in the "tokenization of real-world assets," where the operator identifies an underlying asset (excluding currency), creates a digital token representing the delivery rights of that asset, and holds the underlying asset in custody. For example, using physical gold, real estate, or bonds as underlying assets, corresponding tokens are issued, allowing investors to redeem or instruct the delivery of the asset as agreed by holding the tokens. By incorporating these two concepts into legal provisions, the bill systematically treats the business of holding digital assets and tokenized assets on behalf of clients as financial products, rather than simply applying existing financial regulatory frameworks to them.
As mentioned above, once Digital Asset Platforms and Tokenized Custody Platforms are recognized as financial products, "providing financial services around such products" (including issuance, trading matching, custody, providing advice, etc.) will generally require holding an Australian Financial Services License (AFSL). The Australian Treasury has explicitly stated that enterprises providing the aforementioned platform services must obtain an AFSL and be subject to financial regulation by ASIC, with applicable basic obligations consistent with those of traditional financial service providers. For CeFi exchanges and custody institutions, if the bill comes into effect, they may need to align their organizational structure, compliance departments, risk management, client asset segregation, information disclosure, and even dispute resolution with traditional regulated financial institutions.
Additionally, the Digital Assets Framework Bill also reflects differentiated thinking at the institutional design level. Specifically, the bill provides exemptions from the AFSL requirements for Digital Asset Platforms that pose extremely low risks to clients, with exempted entities specifically including service providers whose "business falls within the low-value category (i.e., does not meet specified financial thresholds)" and "whose services do not constitute a significant part of their business." The first category applies to operators of digital asset platforms, while the second category applies to personnel providing services related to such platforms. Furthermore, the bill stipulates that if a platform holds client tokens and participates in staking or distributing profits on their behalf, it constitutes "custodial staking," which falls within the scope of regulated business; whereas if users control their private keys and directly participate in staking on-chain, it is considered "non-custodial staking," which does not fall under the adjustment scope of this bill. Additionally, for "wrapped tokens" that grant holders redemption rights, the bill disregards the existence of the redemption rights when determining whether such tokens constitute financial products, returning to the essential characteristics of the assets or rights they represent.
Operationally, the bill also confirms that for open blockchain infrastructure such as Bitcoin and Ethereum, it will not directly classify them as financial market infrastructure or financial products, thereby avoiding imposing unmanageable compliance obligations on underlying open-source protocols. Moreover, if the Digital Assets Bill is passed, a transitional period of 18 months will be established after the reform is initiated.
3. Reflections of Australia's Regulatory Direction for Cryptocurrency Assets in the Bill's Introduction
The introduction of the Digital Assets Framework Bill marks a new stage in Australia's cryptocurrency regulation and reflects a significant shift in regulatory thinking over the past two to three years.
First, this represents a breakthrough from non-existence to existence. As mentioned earlier, Australia previously had virtually no specialized financial regulation in the cryptocurrency trading platform and custody sectors, with regulatory focus remaining on baseline areas such as anti-money laundering. This legislation is the first to bring cryptocurrency platforms into mainstream financial regulation, indicating that the government has recognized the need for the digital asset industry to be subject to strict supervision, similar to traditional markets such as securities and derivatives. This shift has been driven to some extent by international trends and risk events: internationally, the European Union's introduction of the Markets in Crypto-Assets Regulation (MiCA) in 2023, the United States' strengthening of enforcement against cryptocurrency exchanges, and the rollout of licensing systems in Asian financial centers such as Singapore reflect a tightening global regulatory environment; domestically in Australia, Australian investors have deeply engaged in the cryptocurrency market over the past few years, and the collapse of some cross-border exchanges (such as FTX) has also affected Australian users, prompting calls from the public and political circles for stronger domestic regulation. Therefore, the Australian government has chosen to align with these trends, strengthening regulatory efforts in legislation and adjusting its previously laissez-faire attitude. The signal released by the new bill is clear: Australia no longer views the cryptocurrency industry as a special zone outside the financial system but is gradually incorporating it into unified financial regulation within the financial system.
Secondly, the regulatory tone in Australia and other countries has shifted from a wait-and-see approach to active governance. Looking back at the actions of the Australian government over the past two years, a gradual path can be observed: from late 2022 to early 2023, the Australian Treasury conducted research and consultation on "Token Mapping." The so-called token mapping refers to the categorization of various cryptocurrency tokens' functions and legal attributes, assessing whether existing regulations cover these attributes to identify regulatory gaps. At that time, the government's stance was to first clarify "what to regulate" before deciding "how to regulate." The token mapping consultation report published in February 2023 is seen as a foundational document for subsequent policies, suggesting which tokens may need legislative oversight and which can maintain the status quo. Subsequently, in the second half of 2023, the Australian government drafted an initial regulatory framework for digital asset platforms (i.e., the draft "Regulation of Digital Assets and Tokenized Custody Platforms" published by the Australian Treasury in September 2025) and sought industry feedback. After several months of refinement, it was officially submitted to Parliament in November 2025. These steps indicate that Australian regulators have moved from exploratory research to formal legislation, showing a clear shift in attitude. Especially after the Albanese government took office in 2022, there were concerns in the market that the new government would slow down the proposed cryptocurrency regulatory pace of the previous administration, but the actual progress indicates that the new government also recognizes the necessity of regulation and chooses to advance steadily. The transition from no regulation to having regulations also conveys a policy signal: Australia aims to establish a credible governance framework in the field of digital asset regulation to better protect investors and attract compliant businesses. The Australian Treasury particularly emphasizes that this legislation will "strengthen consumer protection, modernize the regulatory system, enhance confidence, and attract investment." It is evident that regulators do not intend to suppress the industry but are striving to find a governance model that balances protection and innovation. This direction aligns with many Western countries: embracing the economic opportunities brought by new technologies, but with the premise of setting up firewalls to prevent risks.
Thirdly, the new bill reflects a slight adjustment in policy focus. Compared to a few years ago, when the Australian government emphasized tax treatment and combating illegal uses, the current policy focus has shifted towards market institution regulation and investor protection. For example, early discussions were more centered around how to tax cryptocurrency transactions and whether citizens could evade taxes through cryptocurrencies; recent measures (including legislative requirements for licensing and plans to strengthen the relationship between banks and the cryptocurrency industry) focus on establishing a fair and orderly market. This shows a shift in the regulatory "wind direction": from viewing cryptocurrency as an emerging phenomenon and niche speculative tool to recognizing it as part of the mainstream financial ecosystem that requires regular regulation. At the same time, the government's understanding of the cryptocurrency industry has become more comprehensive. For instance, the government has initiated research on central bank digital currencies (CBDCs), supporting the Reserve Bank of Australia in conducting a pilot for the digital Australian dollar (eAUD) in 2023, and plans to discuss launching a broader digital financial innovation testing environment in 2025. These initiatives indicate that the Australian government is attempting to achieve a dynamic balance between regulatory constraints and support for innovation. On one hand, it strictly controls cryptocurrency intermediaries, while on the other hand, it also reserves space and policy support for new technology applications (such as CBDCs and DeFi). It can be anticipated that Australia's cryptocurrency regulation will no longer be a "vacuum" of neglect but will resemble traditional financial markets, with a complete licensing management, risk monitoring, and international coordination mechanisms, while officials will also actively explore innovation to maintain their position in the global fintech competition.
Finally, the new regulatory framework resonates with the international wave of cryptocurrency regulation. Especially in terms of investor protection, Australia has drawn on the experiences of many other countries, such as requiring trading platforms to implement custodial segregation of customer assets and introducing compensation schemes, similar to New York's requirements for cryptocurrency custody or the reserve requirements in the European Markets in Crypto-Assets Regulation (MiCA). Australia's choice to integrate cryptocurrency services into the existing financial licensing system (rather than creating a completely new independent regulatory framework) also reflects a trend similar to that of the UK and Singapore—utilizing mature financial regulatory structures to oversee new types of assets, thereby ensuring regulatory consistency and cross-market collaboration. As the Financial Action Task Force (FATF) promotes countries to implement the "travel rule" (requirements for cryptocurrency transfer information disclosure) and the G20 discusses global cryptocurrency regulatory standards, Australia's new bill also makes its domestic regulatory framework more aligned with international standards. For example, when the Australian Transaction Reports and Analysis Centre (AUSTRAC) expands its regulatory scope starting in 2026, Australia will essentially meet the FATF's full coverage regulatory requirements for virtual asset service providers (VASPs).
In summary, the regulatory direction in Australia has shifted from being a bystander to an active participant: actively shaping rules through legislation and policy rather than merely waiting for international consensus. This change will help Australia gain a greater voice in the global dialogue on digital asset governance and build its image as a "trustworthy and competitive digital asset innovation center."
4. Impact of the Bill on Cryptocurrency Industry Practitioners
The introduction of the new regulatory framework will have profound impacts on Australia's cryptocurrency industry in both the short and long term.
In terms of short-term impacts, Australia's cryptocurrency industry will face compliance pressures and opportunities for industry reshuffling. For cryptocurrency exchanges and custody institutions currently active in the Australian market, obtaining an Australian Financial Services License (AFSL) and complying with new regulations will become new thresholds. In other words, relevant practitioners will need to assess their business during the transition period and submit detailed license application materials to the Australian Securities and Investments Commission (ASIC), including business plans, risk management strategies, compliance structures, and qualifications of responsible persons. This will be a significant test for the compliance teams and legal advisors of these enterprises. Some smaller or resource-limited practitioners may choose to exit the market or shift to serving overseas clients, leading to industry consolidation. In contrast, larger practitioners will invest funds and manpower to actively apply for licenses and adjust internal processes to meet requirements in advance. These measures may increase operational costs but can also enhance the robustness of the platforms. Additionally, under the government-backed licensing system, future Australian investors may be more inclined to choose exchanges and custodians that hold an AFSL for trading, as these institutions are regulated by ASIC, thus possessing higher credibility and security. Companies that fail to obtain licenses will be viewed as underground or offshore platforms, making it increasingly difficult for them to operate—customers will lack confidence, and traditional financial service providers like banks will be more cautious in considering the compliance risks of cooperating with them. Therefore, the new policy will drive a survival of the fittest in the industry: compliant operators are likely to expand their market share, while non-compliant ones will gradually be eliminated or pushed into gray areas.
In terms of medium- to long-term impacts, Australia's cryptocurrency industry will gain more opportunities for regulated development and international cooperation. In the long run, government oversight will help standardize and scale the digital asset industry. On one hand, with enhanced investor protection, user trust will increase, and more mainstream institutions and individuals may feel secure participating in cryptocurrency investments, thereby expanding the market size. On the other hand, licensed operations can help cryptocurrency enterprises bridge connections with traditional finance—for example, making it easier to obtain banking services, insurance support, and even legally restricted resources like advertising. These impacts will help improve the sustainability of the cryptocurrency industry ecosystem. Furthermore, a clear regulatory environment can attract international compliant capital and enterprises to enter Australia. For some cryptocurrency companies seeking global expansion, Australia's new regulations provide a clear entry path: applying for an Australian Financial Services License (AFSL) and conducting business in Australia. Compared to jurisdictions with regulatory uncertainty, Australia's relatively complete legal system and investor market will have stronger appeal. Therefore, if the new bill is ultimately passed, it will greatly assist Australia in becoming one of the hubs for digital asset business in the Asia-Pacific region.
Regarding the impact on consumers and investors, the introduction of the bill can also bring a series of positive effects. Among them, the most direct impact is the increased security of funds—the new bill requires platforms to disclose asset custody methods in detail and strengthen internal risk controls, and ASIC will also monitor the relevant platforms. This regulation can reduce the likelihood of users suffering losses due to platform malfeasance or bankruptcy. Additionally, since licensed platforms are required to report their operational status to regulatory authorities regularly, some information will also be made public, allowing the cryptocurrency market to develop further towards transparency, which will help investors better compare the reliability and service quality of different platforms. In summary, regulation provides a protective umbrella for consumers and investors, which, in the long run, will help cultivate a more mature and rational investment community.
However, it is important to note that not all impacts of the bill's introduction are positive; challenges also exist. For example, as compliance costs rise, platforms may pass some of these costs onto users through increased withdrawal fees or reduced staking yields, which may, to some extent, dampen user participation enthusiasm. At the same time, the pace of innovation may slow down: in a free market environment, the cost of experimenting with new products and services is relatively low, whereas under regulation, every new feature must consider compliance, potentially delaying the industry's innovation iteration. However, this "slowdown" often results in "steady and far-reaching" outcomes, sacrificing some aggressive growth during a wild growth phase for the healthy development of the industry as it stabilizes and matures.
5. Future Direction of Cryptocurrency Regulation in Australia
Looking ahead, this article believes that Australia's cryptocurrency regulation will continue to develop in the direction of institutionalization, refinement, and international cooperation.
Institutionalization means that the regulatory framework will continue to improve and become a legal norm. After the passage of the digital asset bill, we expect that there may be further enhancements to related supporting regulatory guidelines and secondary regulations in the future, including capital and reserve requirements for digital asset platforms (to prevent run risks), independent third-party audit requirements for custodial assets, and standards for information disclosure formats for platform operators. At the same time, the Australian government may further assess whether existing laws need to be amended to align with the new regulations. For example, whether the Australian Bankruptcy Act should add provisions to clarify the priority of customer digital assets in the event of a cryptocurrency exchange's bankruptcy; or whether the definitions of terms related to digital assets in the Australian Securities Act and Tax Act need to be unified with the new bill. As time progresses, cryptocurrency assets may gradually be incorporated into the regulatory scope of various relevant legal fields (such as inheritance, anti-fraud, accounting standards, etc.), thereby truly integrating into the economic system.
Refinement will be reflected in the regulatory strategies being continuously adjusted based on industry evolution. After initially establishing a licensing regulatory framework, the Australian Securities and Investments Commission (ASIC) and the Australian Treasury may further monitor industry risks and respond to emerging issues in the next two to three years. For instance, stablecoin regulation may be prioritized. Additionally, regulatory measures for DeFi may be further strengthened. Furthermore, in the fields of NFTs and metaverse assets, if they exhibit financial functions (such as NFT fractional trading or NFT staking and lending), their regulation may also be brought into discussion. Overall, regulators will continue to conduct "token mapping" research in practice, clarifying which new businesses need to be regulated and what kind of regulatory sandboxes or guidelines are needed for preliminary testing. This refined management will ensure that regulation does not lag too far behind the market while avoiding a one-size-fits-all approach that hinders innovation.
In terms of international cooperation, Australia may strengthen coordination with other jurisdictions. The nature of cryptocurrency assets is cross-border, and the regulatory measures of one country often require the cooperation of others to be effective. For example, in law enforcement cooperation: if an unlicensed overseas exchange provides services to Australian users, the Australian Securities and Investments Commission (ASIC) may need to collaborate with the regulatory authorities of the country where the exchange is located to take joint action in the next two to three years. Currently, Australia is already a member of the Financial Action Task Force (FATF), the International Organization of Securities Commissions (IOSCO), and other organizations that are promoting global cryptocurrency regulatory standards. At the same time, the evolution of Australian regulatory policies may also refer to other international practices: for instance, the experiences of the European Union's Markets in Crypto-Assets Regulation (MiCA), the effects of Singapore's changes to licensing conditions, and the United States' attitude towards decentralized protocols may all serve as references for Australia. It is foreseeable that in the near future, the cryptocurrency regulations of major economies will gradually converge, achieving a certain degree of mutual recognition of rules or interoperability of regulatory sandboxes.
Finally, from a macro perspective, with the implementation of this series of regulatory measures, Australia will gain greater initiative in its digital economy transformation. Blockchain and digital assets are viewed by the government as important components of future finance, and improving regulation is aimed at legitimizing and empowering them. It is anticipated that as the regulatory framework matures, cryptocurrency assets are expected to achieve smoother integration with traditional financial assets—for example, security token offerings (STOs), asset tokenization trading platforms operating in a compliant environment, traditional funds legally investing in digital assets, and banks safely conducting digital asset custody services, among others. These areas, which currently seem to be "taboos" where traditional finance touches cryptocurrency, may be opened up in the future, thereby unleashing greater market potential.
6. Conclusion
In summary, the recent dynamics of Australia's cryptocurrency asset tax system and regulation show a significant trend towards normalization and proactivity. From maintaining the existing tax framework and emphasizing the applicability of principles to the introduction of the first dedicated regulatory bill to fill institutional gaps, various signs indicate that Australia is making every effort to catch up with the global pace of cryptocurrency regulation. In this new regulatory era, practitioners will face higher compliance requirements and responsibilities, investors will gain stronger protection and confidence, and market operations will become more transparent and orderly. Amidst both challenges and opportunities, all parties involved in Australia's cryptocurrency industry need to adjust their strategies in a timely manner: enterprises should embrace regulation and improve internal governance to achieve legal status; investors should also enhance their risk awareness and choose compliant channels to participate in the market. In the coming years, we will continue to witness the evolution of Australia's cryptocurrency tax system and regulation, and its experiences and lessons will provide valuable reference paradigms for other countries.
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