Australia Crypto Regulation: New Bill Enforces Licensing for Exchanges

Key Insights:

• The latest crypto regulation news showed that Australia mandates an AFSL licence for crypto exchanges and custodians.
• First comprehensive legal framework for digital asset platforms.
• Focus on consumer protection and safer handling of user funds.

Australia’s crypto industry has reached a major milestone with the launch of landmark legislation. After years of uncertainty, the country has finally set a clear crypto regulation for the industry.

The new legislation also stipulates that crypto exchanges and custodians need to have an Australian Financial Services License (AFSL). The law is aimed at providing stronger consumer protection and a stable system for the growing crypto industry.

Australia Introduces New Crypto Regulation Framework

Australia’s financial watchdog has introduced a licensing scheme targeting crypto exchanges and custodians. The legislation requires every crypto exchange platform to have an Australian Financial Services License.

The latest development in Australia’s crypto regulation space has attracted much attention. This is because it marks the country’s first legislation targeting digital asset exchange platforms.

Digital Economy Council of Australia praised the development, stating:

“For the first time, we have a legislative framework that directly addresses digital asset platforms and it provides long-awaited clarity for businesses, investors and regulators, and marks a shift from uncertainty toward implementation.”

Interestingly, this move comes amid growing crypto regulatory efforts in countries across the world. For instance, the United States is moving forward with the much-awaited CLARITY Act to bring clear crypto rules in the country.

What Australia’s New Crypto Regulation Update Means?

Notably, the new crypto regulation of Australia creates two types of regulated digital asset businesses. These are crypto exchanges and custodians. While crypto exchanges hold assets for users, tokenized custody platforms store real-world assets and issue digital tokens that represent them.

The new crypto regulation intends to oversee both these businesses. This puts them under the same rules as traditional brokers and fund managers.

Thus, they are under rules like requirements to protect customer funds, give clear information, avoid misleading behavior, and have systems for complaints and compensation.

The bill now awaits Royal Assent, the final formal step before becoming law. The start date is set for 12 months after assent, and an extra transition period for businesses to comply.

What is more noteworthy is the nature of Australia’s crypto regulation. The law doesn’t regulate crypto itself. Instead, it emphasizes the companies that manage the money. The objective is to avoid issues such as mixing client money, bankruptcy, or misuse, which have led to huge losses in the past.

Industry Leaders Welcome Australia’s New Crypto Law

It is worth noting that the Industry leaders have welcomed the law. A Kraken spokesperson said it shows Australia is serious about crypto and gives firms confidence to invest locally.

Kate Cooper, CEO of OKX Australia, called it a “pivotal moment.” Cooper stated that it lays the groundwork for bigger institutional investment and long-term growth.

The Digital Economy Council of Australia (DECA) has been vocal about crypto regulation. DECA noted that the next focus will be on how licensing works, transitional arrangements, and how the rules are applied in practice.

CEO Amy-Rose Goodey described the moment as the result of years of discussions, submissions, and coordination. She stated, “It’s now about how this works in practice, licensing, implementation, and how these settings work for real businesses operating in the real world.”

Former Treasury official Jazz Ozvald also expressed excitement. Ozvald highlighted additional guidance on how the law applies to digital tokens controlled through advanced arrangements like multi-party computation (MPC).