Australia Moves to Tighten Control Over Crypto Exchanges with New Law

Australia has unveiled draft legislation to bring crypto exchanges under tougher financial oversight, a move hailed by regulators as essential for consumer protection but sparking debate across the industry. Assistant Treasurer Daniel Mulino called the proposed law “the cornerstone of our digital asset roadmap,” stressing that the Albanese government seeks to legitimize trusted players while shutting down bad actors.

Under the draft, two new financial product categories will be created: “digital asset platforms” and “tokenized custody platforms.” Providers of these services will be required to obtain an Australian Financial Services Licence (AFSL) from the Australian Securities and Investments Commission. Until now, only exchanges offering derivatives or similar products needed to register with the corporate regulator, while most trading platforms were only listed with AUSTRAC.

The law outlines strict rules for custody, settlement, staking, and wrapped tokens. Exchanges that fail to comply could face penalties as high as 16.5 million Australian dollars ($10.8 million), three times the benefit gained, or 10% of annual turnover. However, smaller platforms deemed “low risk,” handling less than $3,300 per client or $6.6 million annually, will be exempt.

Crypto businesses largely welcomed the framework. Swyftx CEO Jason Titman said the industry “shouldn’t be frightened of high standards,” while OKX Australia’s Kate Cooper emphasized the importance of strong enforcement to ensure licensed firms are not undercut by unregulated operators. Crypto.com’s Vakul Talwar called the proposal “long overdue,” arguing it balances protection with innovation, while Kraken’s Jonathon Miller urged against a one-size-fits-all approach that could hurt smaller firms.

The draft is now open for consultation until October 24, after which the Treasury will refine the rules. If passed, the legislation would mark Australia’s most significant regulatory shift for digital assets to date, aiming to give consumers confidence and businesses regulatory certainty.