Introduction

The wait is over. On 25 September 2025, the Australian government finally unveiled its draft legislation for regulating digital asset platforms and cryptocurrency exchanges. Delivered by Assistant Treasurer Daniel Mulino, this move signals a watershed moment for the country’s crypto sector, which has long operated in a regulatory grey zone.

For years, blockchain innovators, exchanges, and startups have asked for clarity. Without it, many have either faced uncertainty, de-banking, or looked offshore for friendlier jurisdictions. Now, Australia is taking a bold step forward — integrating crypto into existing financial frameworks while still leaving space for innovation.

In this article, we’ll break down the draft legislation in detail, unpack its implications for exchanges, custodians, VASPs, and startups, and explore how Australia is positioning itself against global peers. We’ll also explain why getting ahead on compliance now will give you a competitive edge — and how Digital One Agency can help.

Why This Matters: A Turning Point for Crypto in Australia

The collapse of FTX in 2022 shook the global industry. Billions of dollars evaporated, consumer confidence was destroyed, and regulators worldwide were forced to acknowledge the dangers of unregulated platforms.

Australia’s new draft law is the government’s response to this and years of lobbying by the crypto community. Instead of building a bespoke regime from scratch, the draft extends the Corporations Act to cover digital asset activities. This gives ASIC direct oversight of exchanges, custody providers, and tokenised financial products.

For the first time, the rules are clear:

• If you hold customer funds, you need to comply.
• If you facilitate trading, you need to comply.
• If you want to operate long-term, you need a licence.

This approach offers confidence for investors and consumers, while aligning Australia with major global frameworks.

Key Definitions and Scope

The legislation introduces two new regulated product categories:

1. Digital Asset Platforms

Covers platforms that facilitate the trading, exchange, or transfer of cryptocurrencies and digital assets. Think: centralised exchanges, brokers, and trading platforms.

2. Tokenised Custody Platforms

Applies to services that hold or safeguard tokenised assets on behalf of clients. This includes wrapped tokens, staking-as-a-service models, and any business where client assets are stored.

What’s In, What’s Out?

• In: Exchanges, custodians, stablecoin issuers, and tokenised stored-value facilities.
• Out: Non-financial tokens (e.g., in-game tokens, most NFTs), and decentralised protocols with no central control.

Stablecoins are given special attention. To operate, they must maintain 1:1 collateral backing and strict transparency — preventing the risk of under-collateralised schemes.

This narrow but focused approach ensures financial services are regulated, while still allowing broader blockchain experimentation outside the financial realm.

Licensing Requirements and Obligations

The draft legislation requires affected businesses to hold an Australian Financial Services Licence (AFSL) — the same licence banks, brokers, and insurers already operate under.

Core Obligations for Crypto Companies

1. Governance and Risk Management
   • Minimum capital reserves.
   • Client asset segregation to prevent commingling.
   • Robust cyber security frameworks.
2. Operational Standards
   • Transparent transaction settlement rules.
   • Conflict of interest management.
   • Dispute resolution processes.
   • Independent auditing and reporting.
3. Consumer Protections
   • Insurance or compensation schemes.
   • Specific safeguards against volatility, hacks, and fraud.

This isn’t box-ticking. The government is clear: crypto operators must act like financial institutions, not tech startups flying under the radar.

Exemptions for Small Operators

Not every platform will be subject to the full regulatory burden. Exemptions apply to “small, low-risk” operators that:

• Hold less than AUD 5,000 per customer, or
• Facilitate less than AUD 10 million in annual transactions.

This proportional approach prevents regulation from crushing early-stage startups while still protecting consumers exposed to larger, riskier operations.

Penalties for Non-Compliance

The penalties are designed to bite — hard. Breaches can result in:

• Fines up to AUD 16.5 million, three times the benefit gained, or 10% of annual turnover (whichever is greater).
• Potential civil and criminal charges under the Corporations Act.

For larger platforms, this makes non-compliance not just risky but existentially dangerous.

Consultation and Timeline

The draft is currently open for public consultation until 24 October 2025. Treasury has invited submissions from industry, consumers, and stakeholders.

Mulino has called it a “preliminary version” that will be refined with input. Final legislation is expected in 2026, though rollout timelines remain flexible.

For businesses, the message is clear: don’t wait for the final law. Start preparing now.

Industry Reactions

Broadly Positive — But Cautious

• Swyftx: Welcomed the high standards, saying the industry should not fear compliance.
• OKX Australia: Emphasised that enforcement will prevent unfair undercutting.
• Crypto.com: Called the rules “long overdue” and sector-aware.
• Kraken: Applauded the investor confidence boost but warned against one-size-fits-all rules that might crush smaller innovators.

Social Media Reactions

On X (formerly Twitter), most responses have been supportive. Industry figures praised Australia for moving forward, with some warning of compliance costs leading to de-banking issues or consolidation.

Still, the general sentiment is bullish: clearer rules mean clearer paths for institutional investment.

Historical Context

Australia’s regulatory journey has been a slow burn:

• 2022: Token mapping exercise announced.
• 2023-2024: Policy papers released, but no legislation.
• 2025: Crypto left out of the federal budget, frustrating industry players.

This slow pace saw talent and capital flow offshore. With this draft, Australia is finally catching up — and in some areas, leaping ahead by embedding crypto directly into existing frameworks rather than inventing entirely new ones.

Global Comparisons

Australia isn’t alone in this race. Other jurisdictions are also tightening rules:

• European Union (MiCA): Covers stablecoins, trading, and custody with strict requirements.
• United Kingdom: Focused on bringing crypto under financial services laws.
• Singapore: Already a hub with its Payment Services Act.
• United States: Fragmented, but SEC and CFTC are tightening their grip.

Australia’s approach mirrors Singapore’s — integrating crypto into established financial law — but with unique exemptions for small-scale operators. This balance may prove attractive to both startups and institutions.

Broader Implications

1. For Investors: Trust in Australian exchanges and custodians will increase, encouraging greater participation.
2. For Startups: Compliance costs will rise, but the clarity could unlock institutional partnerships.
3. For the Economy: Jobs in compliance, legal, and technology will grow.
4. For the Industry: Expect consolidation — weaker or non-compliant players will exit.

Most importantly, this framework positions Australia as a potential Asia-Pacific crypto hub, competing with Singapore, Hong Kong, and Dubai.

How to Prepare Now

If you’re a crypto business in Australia — or planning to expand here — here’s what you should do today:

1. Assess Your Business Model
   • Does it fall under “Digital Asset Platform” or “Tokenised Custody Platform”?
   • Are you exempt due to size, or will you need full licensing?
2. Plan for Licensing (AFSL)
   • Begin preparation for ASIC requirements.
   • Establish governance structures and compliance reporting.
3. Review Technical Infrastructure
   • Can your systems handle segregation of client funds?
   • Is your cyber security framework robust enough for regulatory scrutiny?
4. Get Legal and Compliance Partners
   • Work with firms who understand both financial services and crypto innovation.
   • Align your operations with AUSTRAC, ASIC, and Treasury standards.

Final Thoughts

This draft legislation is not just about compliance — it’s about legitimacy. It gives Australian crypto businesses the chance to build on firm foundations, attract global capital, and operate with the trust of both regulators and consumers.

Those who prepare now will not just survive — they’ll lead.

Need Licensing, DCE, VASP or Crypto Compliance Support?

If you operate in crypto — whether as an exchange, custody provider, or tokenised asset platform — the time to act is now.

At Digital One Agency and Digital One Payments, we have an army of seasoned professionals in development, consulting, compliance, and legal structuring. We’ll help you:

• Secure an AFSL licence.
• Register as a DCE or VASP.
• Build compliant custody and exchange platforms.
• Align your business with ASIC, AUSTRAC, and global best practices.

👉 Book a Free 1-Hour Strategy Session
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📞 Call us 24/7 globally: +61 2 9057 9079
📧 Email: contact@digitaloneagency.com.au