Australia unveils crypto licensing proposal with steep penalties

Australia has unveiled draft legislation that would require digital asset platforms to obtain licenses, with penalties of up to 10% of annual turnover for breaches.

Australia has proposed new licensing rules for digital asset platforms, setting out tough penalties for firms that breach requirements.

On Sept. 24, the Treasury released a draft bill that would bring exchanges and custody providers under the Corporations Act, according to a Bloomberg report. Platforms would be required to hold an Australian Financial Services License and comply with conduct standards, including acting “honestly and fairly” and avoiding deceptive practices.

Firms that fail to comply could face penalties equal to the greater of A$16.5 million ($10.9 million), three times the benefit obtained, or 10% of annual turnover. Smaller operators would be exempt if they hold less than A$5,000 per customer and process under A$10 million in annual transactions.

Scope of the proposed rules

The draft legislation marks one of the government’s most significant steps in regulating the country’s crypto sector, which already includes global players such as Coinbase and Kraken. Industry consultation is open until Oct. 24, with final legislation expected later in 2025, followed by a 12-month transition period.

The rules extend consumer protections to “digital asset facilities” such as custody services and multilateral trading platforms, while excluding decentralized tokens not managed by intermediaries.

Treasury said the framework would align with international standards, referencing the EU’s MiCA and Singapore’s Payment Services Act. It also incorporates the OECD’s Crypto-Asset Reporting Framework for tax transparency.

Key requirements include segregating client assets, maintaining cybersecurity safeguards, clear risk disclosures, and internal dispute resolution processes. The bill also seeks to address “debanking” by working with major Australian banks to ensure crypto businesses retain access to financial services.

Industry reaction and next steps

Industry response has been cautiously positive. Coinbase’s Australia head John O’Loghlen welcomed the proposals, saying clear regulation would support growth and global competitiveness. Kraken’s local general manager Jonathon Miller said the draft followed an “extensive consultation period” with government and industry.

The proposal builds on the government’s March 2025 roadmap for digital assets, which prioritized licensing, custody standards, and stablecoin regulation. If passed, it would establish one of the most comprehensive oversight regimes in the Asia-Pacific region.