Australia Passes Comprehensive Crypto Exchange Licensing Law

Australia has enacted its first extensive law governing the digital asset sector, mandating that cryptocurrency exchanges and custodial services obtain licensing to operate legally.

On April 1, 2025, the Corporations Amendment (Digital Assets Framework) Bill was approved by both houses of Parliament, aligning cryptocurrency platforms with existing regulations for brokers and fund managers.

This new legislation establishes two regulated categories under the Corporations Act:

• Digital Asset Platforms — which include exchanges that manage digital assets for users.
• Tokenized Storage Platforms — which are firms responsible for issuing and holding virtual tokens linked to tangible assets.

Both categories are required to secure an Australian Financial Services License (AFSL) from the Australian Securities and Investments Commission (ASIC), which enforces standards concerning client fund security, capital requirements, transparency, and dispute resolution.

Previously, crypto exchanges simply needed to register with anti-money laundering agencies if their offerings did not qualify as financial instruments. The new regulations impose stricter compliance measures.

ASIC will also have enhanced authority to create rules regarding asset custody and management, and firms that violate regulations could face civil penalties. However, smaller operators will have some exemptions, specifically those with less than AUD 5,000 per customer and an annual turnover under AUD 10 million.

The legislation is pending royal assent, the final process before becoming law, and will be enforced 12 months post-approval, allowing for a transition phase for businesses.

Jazz Oswald, a former Deputy Director of Digital Asset Policy at the Commonwealth Treasury, expressed support for the new law. He highlighted that the explanatory memorandum includes clarifications on applying the legislation to scenarios involving multilateral computations controlling digital tokens.

This legislative initiative began in early 2025, aiming to develop a regulated environment that fosters innovation while ensuring consumer protection in Australia's cryptocurrency landscape.