Australia Cracks The Whip: Crypto Exchanges Face Tough New Regulatory Framework
Down Under gets serious about digital asset oversight as exchanges brace for compliance overhaul.
The Regulatory Squeeze
Australian authorities are tightening the screws on cryptocurrency platforms with sweeping new requirements that could reshape the entire trading landscape. These aren't minor tweaks—they're fundamental changes to how exchanges operate and interact with customers.
Compliance or Consequences
Platforms must now implement enhanced verification protocols, strengthen custody solutions, and submit to regular audits. The days of loose oversight are ending faster than a meme coin's bull run. Failure to adapt means facing severe penalties that could put smaller players out of business entirely.
Market Impact Assessment
While established exchanges have the resources to comply, emerging platforms face significant hurdles. The regulatory clarity might attract institutional money—but at what cost to innovation? Traditional finance veterans are probably chuckling at crypto finally learning what 'compliance' actually means.
Industry insiders whisper this could either legitimize the space or strangle it in red tape. Only time will tell if these rules protect investors or just protect the establishment from disruption.
What The Crypto Rules Mean
Based on reports, the draft would create two new types of financial products — “digital asset platforms” and “tokenized custody platforms” — and fold them into the Corporations Act so they fall under ASIC’s oversight.
Platforms that hold client crypto or settle trades would have to register, follow custody rules, and provide clearer disclosures to retail users.
Assistant Treasurer Daniel Mulino flagged these changes at a regulatory summit and called the reforms a way to stamp out bad actors while supporting legitimate firms.
The draft sets out targeted obligations for how platforms hold customer assets, how they handle settlement and risk, and what disclosures they must make before offering services to the public.
Companies that already run similar systems will face rules closer to what banks and other licensed financial entities comply with today.
Penalties And Thresholds
According to multiple briefings, penalties for breaches would be whichever is greater: A$16.5 million, three times the gain from the breach, or 10% of annual turnover.
That combination is meant to deter deliberate or large-scale failures rather than only penalize small mistakes. The draft also proposes a low-value exemption so very small operators would not need a full license if they hold less than A$5,000 per customer and facilitate under A$10 million in transactions each year.
How “turnover” will be measured — whether it means global revenue, Australia-only revenue, or something else — has not been spelled out in detail in the draft. That question will be central to how painful the penalty regime becomes for multinational exchanges.
There are also rules targeted at particular activities, such as staking, wrapped tokens and public token infrastructure. The government says the framework aims to be flexible so regulators can adjust which services get the tighter controls if risks change.
Industry and crypto groups and global exchanges gave cautious responses. Some said clearer rules will help growth by removing uncertainty; others warned compliance costs could be heavy for mid-sized players.
Reports have disclosed that the consultation period for the draft runs until 24 October 2025, after which the government will consider submissions and refine the law before tabling final legislation.
Featured image Nomads Hostel, chart from TradingView
