TLDR
- Australia plans to integrate digital assets into its economy with a new regulatory framework
- Crypto exchanges will need financial service licenses and meet capital requirements
- The government will address de-banking concerns and work with major banks
- Stablecoins will be regulated as “stored-value facilities” under payment licensing reforms
- Draft legislation is expected in 2025, ahead of a closely contested federal election
The Australian government has announced a new approach to regulating digital assets in the country. This plan aims to integrate cryptocurrencies into the broader economy while setting up rules to protect consumers.
Australia’s Treasury Department released a white paper on March 21 outlining the new framework. The plan draws inspiration from regulatory models used in the European Union and Singapore.
Under the new rules, crypto exchanges will be known as Digital Asset Platforms (DAPs) in Australia. These platforms will need to obtain an Australian Financial Services License to operate legally.
The licensing requirements include meeting capital adequacy standards. This means exchanges must hold enough funds to cover potential losses.
Customer protection is a key focus of the new regulations. Crypto exchanges will need to use third-party custodians to store customer assets. This separation aims to keep user funds safe if an exchange faces financial troubles.
The government plans to exempt small-scale platforms and startups from some requirements. This exception will help new businesses enter the market without facing heavy regulatory burdens.
Blockchain software developers will also be exempt. Companies that create digital assets that aren’t financial products won’t need to follow the same rules as exchanges.
Stablecoins will receive special treatment under the framework. The government will regulate payment stablecoins as “stored-value facilities” under its Payment Licensing Reforms.
The plan includes pilot trials for tokenized money. The Australian Treasury, Securities and Investment Commission, and Reserve Bank will test using stablecoins to settle transactions in wholesale markets.
The De-Banking Challenge
De-banking has been a major concern for crypto businesses in Australia. This happens when traditional banks refuse to provide services to crypto companies. The government promises to address this issue through its new licensing regime.
Treasury officials will work with Australia’s four largest banks to better understand de-banking. This collaboration aims to find solutions that allow crypto businesses to access banking services.
The timing of these announcements comes ahead of a federal election. The vote is scheduled to be held by May 17, with current polls showing a tight race between Prime Minister Anthony Albanese’s Labor Party and the opposition Coalition.
The Coalition has also promised to prioritize crypto regulation if elected. Both political parties appear to recognize the importance of creating clear rules for the digital asset industry.
Caroline Bowler, CEO of local exchange BTC Markets, called the reforms “sensible.” She noted they would help Australia stay competitive with global peers in the crypto space.
Jonathon Miller from Kraken Australia emphasized the “urgent need for bespoke crypto legislation.” He believes clear regulations will remove barriers to growth in the Australian economy.
The government expects to release draft legislation for public consultation later in 2025. This timeline gives stakeholders a chance to provide feedback before the rules become final.
