- Australia passes its first comprehensive digital asset law, requiring crypto exchanges and tokenized custody platforms to obtain Australian Financial Services Licenses.
- New rules aim to reduce risks like commingling and misuse of customer assets, while supporting growth in tokenized markets and digital finance.
Australia has moved to tighten oversight of digital assets, passing its first comprehensive law that brings crypto exchanges and custody providers into the country’s mainstream financial licensing regime. The new framework targets platforms that hold customer assets, with officials positioning the shift as both a consumer protection measure and a way to capture a larger share of a growing digital finance market.
New licensing regime for digital asset and tokenized custody platforms in Australia
The Corporations Amendment (Digital Assets Framework) Bill 2025 passed both houses on April 1, establishing a clear set of obligations for firms that custody digital assets or tokenized real-world assets on behalf of users. Rather than treating cryptocurrencies themselves as financial products, the law focuses on the intermediaries that control client funds.
The bill creates two specific categories under the Corporations Act. “Digital asset platforms” are defined as entities that hold crypto for customers, such as exchanges and custodial service providers. “Tokenized custody platforms” cover businesses that hold traditional assets, like securities or other real-world instruments, and issue corresponding tokens that represent those holdings on-chain. Both categories are now required to secure an Australian Financial Services License (AFSL) from the Australian Securities and Investments Commission (ASIC).
By bringing these platforms into the AFSL regime, lawmakers are aligning them with the regulatory expectations that already apply to brokers and fund managers. Operators must implement systems to protect client assets, provide standardized disclosures about services and risks, avoid misleading conduct, and maintain internal processes for dispute resolution and potential compensation. The framework is designed to address risks that have repeatedly surfaced in crypto market failures, including commingling of client and corporate funds, insolvency events that trap user assets, and unauthorized use of customer holdings.
Regulatory focus on intermediaries and crypto market risk
The new law takes an intermediary-centric approach rather than attempting to reclassify or directly regulate specific tokens. Policymakers have targeted the “middle layer” of the digital asset ecosystem—companies that pool, store, or otherwise control user assets at scale. This reflects concerns that weaknesses in platform governance, custody practices, and transparency have been central to past collapses and losses in the sector.
By subjecting digital asset platforms and tokenized custody platforms to familiar financial services rules, Australia is seeking to push crypto businesses toward more traditional standards of segregation, record-keeping, and operational resilience. The AFSL obligations around disclosures and conduct are intended to create more consistent information for users comparing different services, while the requirement for dispute resolution mechanisms brings crypto platforms closer to the expectations faced by legacy financial firms.
Platforms that do not hold assets for users but merely provide software or non-custodial tools are not explicitly the focus of this particular legislative package, which concentrates instead on entities that actually take control of client funds. The intent is to close gaps where customers may not fully understand their legal position if a platform fails, while avoiding an overly broad definition that might capture low-risk infrastructure providers.
Economic opportunity and industry reaction in Australia
Research cited by policymakers from the Digital Finance Cooperative Research Center and industry groups estimates that tokenized markets, digital asset services, and related payment activity could generate up to A$24 billion per year for the Australian economy, roughly 1% of GDP. Under the country’s previous regulatory trajectory, analysts projected that only about A$1 billion of that annual opportunity would be captured by 2030, suggesting that unclear rules were limiting local development.
The new legislation is intended to signal that the jurisdiction is open to regulated digital asset activity while seeking to minimize the types of failures that have damaged trust globally. For global and regional crypto firms, the framework provides a clearer path for building exchange, custody, and tokenization operations in Australia under an established licensing system.
Industry participants have welcomed the clarity. A spokesperson for Kraken described the law as providing a “top-down signal” that regulators are serious about integrating digital assets into the financial system, arguing that this type of certainty can encourage companies to invest and expand domestically. Kate Cooper, CEO of OKX Australia and co-chair of the Digital Economy Council of Australia, characterized the legislation as a pivotal step that lays the groundwork for institutional engagement and longer-term capital deployment into the sector.
With institutional investors often requiring robust legal protections and clear counterparty obligations before committing sizable capital, the AFSL-based approach could help position Australia as a more attractive base for tokenization projects, regulated exchanges, and professional-grade custody solutions.
Conclusion
Australia’s new digital asset framework marks a shift from fragmented oversight toward a unified licensing regime for crypto exchanges and tokenized custody platforms. By embedding these firms within the existing Australian Financial Services License system, policymakers aim to reduce platform risk while capturing a larger share of the potential A$24 billion annual digital finance opportunity. The response from major industry players suggests that clearer rules may accelerate investment and institutional participation in the country’s evolving crypto market.
Disclaimer
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from cryptonewsbytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.
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