Australia is moving to bring crypto firmly inside its existing financial rulebook, targeting exchanges and custody providers with a sweeping new consumer‑protection regime that could reshape the country’s digital asset industry.
Under the proposed Corporations Amendment (Digital Assets Framework) Bill 2025, crypto platforms that hold or manage customer assets would be treated much more like traditional financial service providers. They would be subject to financial services laws, with the Australian Securities and Investments Commission (ASIC) designated as the primary watchdog.
The legislation, introduced by Treasurer Jim Chalmers and Financial Services Minister Daniel Mulino, is Australia’s first attempt at a comprehensive, unified framework for companies that safeguard digital assets on behalf of clients. Until now, most major exchanges operated in a regulatory gray zone—registered in various ways, but not held to the same standards as brokers, banks, or managed investment schemes when it came to custody, disclosure, and operational risk.
According to the government’s own estimates, closing this gap could unlock up to $24 billion in annual productivity gains. Officials argue that clear, enforceable rules will reduce systemic risk, prevent costly failures, and give both institutional and retail investors the confidence to participate in digital asset markets without fear that basic protections are missing.
At the same time, the bill has teeth. Platforms that fail to properly protect client assets could face multimillion‑dollar penalties. That includes exchanges, brokers, and dedicated custody providers whose business model depends on holding user funds. The message is clear: if a company wants to look and act like a financial institution, it will now have to be regulated like one.
Procedurally, the bill was introduced and read for the first time in Parliament on Wednesday. A second reading was moved the same day—a stage at which lawmakers debate the overarching purpose and principles of the legislation rather than its clause‑by‑clause details. From there, it is expected to move through committee scrutiny, possible amendments, and further debate before any final vote.
A key feature of the framework is its focus on custody. The government wants to ensure that customer assets are segregated from a platform’s own balance sheet, properly recorded, and recoverable if an exchange collapses or becomes insolvent. That focus reflects painful lessons from high‑profile international failures in recent years, where users discovered that they were effectively unsecured creditors with little legal recourse.
The bill also aims to address operational and governance risks. Crypto businesses seeking to serve Australian customers will likely be required to meet minimum standards around capital adequacy, cybersecurity, risk management, and internal controls. Executives and key personnel could face fit‑and‑proper checks similar to those in traditional finance, raising the bar for who can legally run a digital asset platform.
For consumers, the changes are designed to offer protections that many assumed already existed. Clearer disclosures about how funds are stored and used, transparent terms around staking, lending, and yield products, and stronger recourse in the event of misconduct or platform failure are all central to the policy intent. Regulators want to prevent a repeat of situations where users were blindsided by fine print that allowed platforms to rehypothecate or commingle their assets.
From an industry perspective, the framework is a double‑edged sword. Compliance costs will almost certainly rise, especially for smaller or lightly capitalized operators that lack robust legal and risk teams. Some offshore exchanges may decide that serving Australian residents is no longer worth the burden and withdraw from the market entirely.
However, the government is betting that the longer‑term payoff will be a healthier, more credible ecosystem. By setting clear expectations and aligning crypto oversight with established financial standards, Australia hopes to attract institutional capital, encourage responsible innovation, and position itself as a jurisdiction where serious players are willing to build.
The move also brings Australia more in line with other major economies that are tightening digital asset oversight. While the specific rules differ from region to region, there is a global trend toward treating centralized crypto intermediaries less like loosely regulated tech startups and more like the financial institutions they effectively are.
For everyday users, the practical impact of the bill—if passed—will likely be felt in several ways. Onboarding processes could become more stringent, with stronger identity checks and monitoring for suspicious activity. Product offerings may become more conservative, particularly around high‑risk leveraged trading or complex yield products. Fees could inch higher as platforms pass compliance costs onto customers.
On the upside, users would gain greater assurance that their funds are not being quietly diverted to risky trading strategies or used to plug holes in a platform’s balance sheet. In a well‑implemented regime, the collapse of a single exchange should no longer threaten to wipe out thousands of retail investors who believed their assets were held in safe custody.
There is also an innovation angle. Clear rules can serve as a baseline for new products and services. Fintech startups, banks, and asset managers may be more willing to build regulated crypto and tokenization offerings once they understand exactly which licenses they need, how custody must operate, and what consumer‑protection obligations apply. A defined regulatory perimeter tends to favor builders who plan for longevity rather than those chasing short‑term speculative gains.
At the same time, critics will likely raise concerns about overregulation and the risk of pushing activity into less regulated offshore or decentralized venues. If rules are too prescriptive, they could stifle experimentation in areas such as decentralized finance, tokenized real‑world assets, or innovative custody solutions like smart‑contract‑based vaults. The effectiveness of the framework will depend heavily on how ASIC interprets and applies it in practice.
Another open question is how the new digital asset rules will intersect with existing consumer‑protection and anti‑money‑laundering regimes. Many Australian crypto businesses already comply with know‑your‑customer and transaction‑reporting obligations, but the bill could introduce overlapping or additional layers of oversight. Ensuring that the different regulatory pieces fit together without unnecessary duplication will be crucial for both efficiency and enforceability.
For businesses currently operating in the sector, strategic preparation becomes essential. Platforms may need to reassess their corporate structures, upgrade custody arrangements, invest in improved security infrastructure, and refine their risk and compliance frameworks. Those that move early to align with the likely new standards will be better positioned to survive the transition and gain market share as weaker competitors fall away.
Investors and users can also take practical steps ahead of the law’s full implementation. That includes favoring platforms that already offer transparent proof‑of‑reserves, clear segregation of customer assets, strong security practices, and straightforward, comprehensible terms of service. The direction of travel is clear: regulators are rewarding behavior that looks and feels like responsible financial stewardship.
Ultimately, Australia’s digital asset push is about closing a dangerous regulatory gap without pretending crypto does not exist. Rather than banning trading or innovation, the government is signaling that if crypto is going to be part of the financial system, it must play by rules designed to protect the public and the broader economy.
The coming months of parliamentary debate and industry consultation will determine how far‑reaching those rules become. But the introduction of the Digital Assets Framework Bill marks a decisive shift: in Australia, major crypto platforms will no longer be able to operate as if they sit outside the established architecture of financial law.