Author: Fintax
In November 2025, the Australian Minister for Finance and the Minister for Financial Services formally submitted the Corporations Amendment (Digital Assets Framework) Bill 2025 to the Federal Parliament, referred to as the 'Digital Assets Framework Bill', which aims to bring 'Digital Asset Platforms' and 'Tokenized Custody Platforms' under the regulatory scope of the Corporations Act. Specifically, it intends to fully place cryptocurrency trading and custody services under the supervision of the Australian Securities and Investments Commission (ASIC) relying on the Australian Financial Services License (AFSL) system.
This article believes that this move reflects Australia's intention to maintain the existing 'current tax law treatment of crypto assets' while legislatively supplementing the regulatory system for crypto transactions and custodial services, marking Australia's shift from the previous baseline regulatory model towards a comprehensive financial regulatory model focused on platforms and custodians. This article will systematically outline the core content of the Digital Assets Framework Bill and the shift in regulatory concepts it reflects, and further assess the potential impact of this legislation on the compliance costs, business models, and cross-border layouts of cryptocurrency exchanges and custodians operating in Australia, thereby providing observations and references for industry practitioners and researchers.
1. Australia's existing crypto asset regulatory framework
Before the 'Digital Assets Framework Bill' comes into effect, Australia's regulatory system for crypto assets mainly consists of three levels: tax regulation, anti-money laundering and counter-terrorism financing regulation (AML/CFT), and fragmented financial regulation.
In terms of tax regulation, generally speaking, Australia does not create new tax categories specifically for crypto but prioritizes applying existing general tax laws to all crypto transactions. In 2021, the Australian Board of Taxation collaborated with several law firms, accounting firms, and other intermediaries to conduct a comprehensive review of the tax treatment of digital assets and related transactions in Australia, and in 2024, it formed an evaluation report on the taxation issues of crypto transactions. The report argues that Australia's current tax laws can generally address the taxation issues of crypto assets and related transactions; this view was later recognized by the Australian Treasury, which also deemed that it is not appropriate to introduce special tax legislation for cryptocurrencies at this stage. Therefore, while Australia's current tax laws acknowledge the uniqueness of crypto, they will not introduce a 'crypto tax' or create large-scale special rules, but rather prefer to apply existing tax law rules.
In terms of anti-money laundering and counter-terrorism financing (AML/CFT) regulation, Australia is one of the first countries to include digital currency exchange services (DCE) in the AML/CFT regulatory framework. The amendment to the Australian AML/CFT law in 2018 first included DCEs in the regulatory scope. This amendment stipulates that any entity engaged in fiat and cryptocurrency exchange business in Australia must register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) and fulfill obligations such as KYC, suspicious transaction reporting, and large transaction reporting. This regulation has made registration for DCEs a mandatory prerequisite, and this requirement remains a significant aspect of Australia's AML/CFT regulation for digital assets.
In terms of fragmented financial regulation, Australia's existing laws mainly use 'whether crypto businesses are similar to traditional financial products' as the primary criterion for determining the applicability of financial regulation: if a certain crypto asset essentially constitutes part of securities, derivatives, or managed investment schemes, then related issuance, trading, and consulting activities will fall under the financial regulatory scope of the Australian Securities and Investments Commission (ASIC); conversely, typical 'pure cryptocurrencies' (such as Bitcoin, ETH), as well as trading platforms that do not involve derivatives, often will not be viewed as financial products or financial service providers, and thus will not be subject to relevant financial regulatory norms.
In summary, before the introduction of the 'Digital Assets Framework Bill,' Australia had initially established a multi-layered governance framework covering crypto assets through tax regulation, anti-money laundering and counter-terrorism financing regulation, and fragmented financial regulation. If the 'Digital Assets Framework Bill' is ultimately passed, it will further unify the legal applicability standards in the field of crypto assets, clarifying regulatory boundaries and subject obligations.
2. The proposed regulatory framework for crypto asset trading under the 'Digital Assets Framework Bill'
The logic of the proposed Digital Assets Framework Bill can be briefly summarized as follows: first, defining the platforms, then treating them as financial products, and finally, using the Australian Financial Services License (AFSL) to further regulate platform operators. At the same time, the content of the bill reflects many customized attributes for the crypto industry. Specifically:
First, the introduction of two new financial products into the (Corporations Act): Digital Asset Platform (DAP) and Tokenized Custody Platform (TCP). The Digital Asset Platform (DAP) refers to a 'facility' that holds digital tokens on behalf of clients, with typical examples being centralized cryptocurrency exchanges and custodial wallet services. The key aspect of the Tokenized Custody Platform (TCP) is the 'tokenization of real-world assets,' typically involving operators identifying an underlying asset (excluding currency), creating a digital token representing the delivery rights to that asset, and holding the underlying asset in custody. For example, using physical gold, real estate, or bonds as underlying assets to issue corresponding tokens, allowing investors to redeem or instruct the delivery of the asset as agreed by holding the tokens. By incorporating these two concepts into legal provisions, the bill systematically treats the business of holding digital assets for clients and tokenized assets as financial products, rather than simply applying existing financial regulatory frameworks to them.
As mentioned above, once digital asset platforms and tokenized custody platforms are identified as financial products, 'financial services related to such products' (including issuance, trading matching, custody, and advisory services) will, in principle, require an Australian Financial Services License (AFSL). The Australian Treasury clearly states that businesses providing services on such platforms must obtain an AFSL and comply with financial regulation from the Australian Securities and Investments Commission (ASIC), with obligations similar to those of traditional financial service providers. For CeFi exchanges and custodians, if the bill comes into effect, they may need to align their organizational structure, compliance departments, risk management, client asset segregation, information disclosure, and dispute resolution with traditional regulated financial institutions.
Moreover, the Digital Assets Framework Bill also reflects differentiated thinking in its institutional design. Specifically, the bill exempts digital asset platforms that pose very low risk to customers from the requirements of the Australian Financial Services License (AFSL), with exempted entities specifically including those whose 'business falls within a low-value category (i.e., does not meet specified financial thresholds)' and 'the services they provide do not constitute a significant component of their business.' The first category applies to digital asset platform operators, while the second category applies to personnel providing services involving such platforms. Additionally, the bill stipulates that if a platform holds customer tokens and participates in staking and profit distribution on their behalf, it constitutes 'custodial staking' and falls within the regulated business scope; conversely, if users control their private keys and directly engage in staking on-chain, it is categorized as 'non-custodial staking' and is not subject to the adjustments of this bill. Furthermore, for 'wrapped tokens' that grant redemption rights to holders, the bill disregards the existence of the redemption rights when determining whether such tokens constitute financial products, reverting to the essential characteristics representing the underlying assets or rights.
At the operational level, the bill concurrently confirms that for open public chain infrastructures like Bitcoin and Ethereum, the bill will not directly categorize them as financial market infrastructures or financial products, thus avoiding the imposition of unworkable compliance obligations on underlying open-source protocols. Additionally, if the (Digital Assets Bill) is passed, a transitional period of 18 months will be established after the reform starts.
3. The regulatory direction reflected by the introduction of the bill regarding Australia's crypto assets
(The Digital Assets Framework) Bill's introduction marks a new stage in Australia's cryptocurrency regulation, reflecting a significant shift in regulatory thinking over the past two to three years.
First, this is a breakthrough from nothing to something. As mentioned earlier, there has been virtually no specialized financial regulation in Australia's crypto trading and custody sectors, with the regulatory focus remaining on baseline areas such as anti-money laundering. This legislation first includes crypto platforms in mainstream financial regulation, indicating that the government recognizes the need for the digital asset industry to be subject to stringent oversight like traditional markets such as securities and derivatives. This shift has been driven, to some extent, by international trends and risk events: on the international level, the EU's introduction of the (Markets in Crypto-Assets Regulation, MiCA) in 2023, increased enforcement against crypto exchanges in the US, and the implementation of licensing systems in financial centers like Singapore reflect a tightening global regulatory environment; domestically, Australian investors have deeply engaged in the crypto market over the past few years, and the collapses of some cross-border exchanges (such as FTX) have also affected Australian users, prompting calls from the public and politicians for strengthened domestic regulation. As a result, the Australian government has chosen to align with the trend and strengthen regulatory measures, signaling a shift from a previously laissez-faire attitude. The message from the new bill is clear: Australia no longer views the crypto industry as a special area detached from the financial system, but is gradually integrating it into unified financial supervision.
Secondly, Australia’s regulatory tone has shifted from cautious observation to active governance. Reviewing the Australian government's actions over the past two years reveals a gradual path: from late 2022 to early 2023, the Australian Treasury conducted research and consultation work on 'Token Mapping.' Token mapping refers to the process of identifying the functions and legal attributes of various crypto tokens, assessing whether existing regulations cover these attributes, and identifying regulatory gaps. At that time, the government's stance was to first clarify 'what to regulate,' and then decide 'how to regulate.' The token mapping consultation report published in February 2023 is regarded as a foundational document for subsequent policies, suggesting which tokens might need to be legislated for regulation and which could maintain the status quo. Subsequently, in the second half of 2023, the Australian government drafted an initial regulatory framework for digital asset platforms (i.e., the draft bill for 'regulation of digital assets and tokenized custody platforms' published by the Australian Treasury in September 2025) and solicited opinions from the industry. After months of refinement, it was formally submitted to Parliament in November 2025. From these steps, it is evident that Australian regulators have transitioned from exploratory research to formal legislation, demonstrating a clear progression in attitude. Especially after the Albanese government took office in 2022, there was concern in the market that the new government would slow down the proposed crypto regulation pace of the previous government, but the actual process shows that the new government also recognizes the necessity of regulation and has chosen to proceed steadily. The shift from no regulation to regulation also conveys a policy signal: Australia aims to establish a credible governance framework in the field of digital asset regulation to better protect investors and attract compliant businesses. The Australian Treasury specifically emphasizes that this legislation will 'enhance consumer protection, modernize the regulatory system, increase confidence, and attract investment.' It is evident that regulators do not intend to suppress the industry but rather strive to seek a governance model that balances protection and innovation. This trend aligns with many Western countries: embracing the economic opportunities brought by new technologies while setting up firewalls to prevent risks.
Third, the new bill reflects a subtle adjustment in policy focus. Compared to a few years ago when the Australian government emphasized tax treatment and combating illegal uses, the current policy focus has shifted towards market institution regulation and investor protection. For example, early discussions were more centered around how to tax crypto transactions and whether citizens could evade taxes through crypto; whereas a recent series of measures (including legislative requirements for licensing and plans to strengthen the relationship between banks and the crypto industry) have focused on establishing a fair and orderly market. This shows that the regulatory 'wind direction' has shifted: from viewing crypto as an emerging phenomenon or niche speculative tool, it has transitioned to treating it as part of the mainstream financial ecosystem that requires regular regulation. At the same time, the government’s understanding of the crypto industry has become more comprehensive. For instance, the government has initiated research on central bank digital currency (CBDC), supported the Reserve Bank of Australia in conducting a pilot of the digital Australian dollar (eAUD) in 2023, and plans to discuss launching a broader environment for digital financial innovation trials in 2025. These measures indicate that the Australian government is attempting to strike a dynamic balance between regulatory constraints and supporting innovation. On one hand, it strictly controls crypto intermediaries, while on the other hand, it also reserves space and policy support for the application of new technologies (like CBDC and DeFi). It is foreseeable that in the future, Australia's crypto regulation will no longer be a laissez-faire 'vacuum zone,' but will resemble traditional financial markets that have comprehensive licensing management, risk monitoring, and international coordination mechanisms, while the authorities will actively explore innovation to maintain their position in the global fintech competition.
Finally, the new regulatory framework resonates with the international wave of crypto regulation. Especially in terms of investor protection, Australia has drawn on many experiences from other countries, such as requiring trading platforms to implement custodial segregation of customer assets and introducing compensation schemes, similar to New York's requirements for crypto custody or the reserve requirements in the European (Markets in Crypto-Assets Regulation, MiCA). Australia's decision to integrate crypto services into the existing financial licensing system (rather than establishing a completely new independent regulatory framework) also reflects a similar approach to that of the UK and Singapore—utilizing established financial regulatory structures to regulate new types of assets, thereby ensuring regulatory consistency and cross-market collaboration. As the FATF pushes countries to implement the 'travel rule' (requirements for disclosing information on crypto transfers) and G20 discussions on global crypto regulatory standards, Australia's new bill also makes its domestic regulatory framework more aligned with international standards. For instance, when the Australian Transaction Reports and Analysis Centre (AUSTRAC) expands its regulatory scope starting in 2026, Australia will essentially meet the FATF's requirements for comprehensive supervision of virtual asset service providers (VASPs).
Overall, Australia's regulatory direction has shifted from being an observer to an active participant: shaping rules through legislation and policy rather than merely waiting for international consensus. This change helps Australia gain a greater voice in the global dialogue on digital asset governance and shapes the country's image as a 'reliable and competitive digital asset innovation center.'
4. The Impact of the Bill on Crypto Industry Practitioners
The introduction of the new regulatory framework will have a profound impact on Australia's crypto asset industry in both the short and long term.
In terms of short-term impacts, Australia's crypto asset industry will face compliance pressures and opportunities for industry reshuffling. For crypto exchanges and custodians currently active in the Australian market, obtaining an Australian Financial Services License (AFSL) and complying with new regulations will become new thresholds. In other words, relevant practitioners need to assess their own businesses during the transition period and submit detailed license application materials to the Australian Securities and Investments Commission (ASIC), including business plans, risk management schemes, compliance structures, and qualifications of responsible persons. This will be a major test for the compliance teams and legal advisors of these enterprises. Some smaller-scale or resource-limited practitioners may choose to exit the market or shift to serving overseas clients, resulting in industry consolidation. In contrast, larger practitioners will invest funds and personnel to actively apply for licenses and proactively adjust internal processes to meet requirements. These measures may increase operational costs but can also enhance the robustness of platforms. Moreover, under a government-backed licensing system, Australian investors may prefer to trade with exchanges and custodians that have obtained an Australian Financial Services License (AFSL), as these institutions are regulated by the Australian Securities and Investments Commission (ASIC), thereby possessing higher credibility and security. Conversely, companies that fail to obtain licenses will be viewed as underground or foreign platforms, making it increasingly difficult for them to operate— not only will customer confidence be lacking, but traditional financial service providers like banks will also be more cautious in considering compliance risks when partnering with them. Therefore, the new policy will promote a survival of the fittest in the industry: compliant operators are likely to increase their market share, while non-compliant ones will gradually be eliminated or pushed into gray areas.
In terms of medium to long-term impacts, Australia's crypto asset industry will gain more opportunities for regulated development and international cooperation. In the long run, inclusion under government regulation will help the digital asset industry to standardize and scale up. On one hand, with strengthened investor protection, user trust will increase, and more mainstream institutions and individuals may feel comfortable participating in crypto investments, thereby expanding market size. On the other hand, licensed operations can help crypto enterprises bridge interfaces with traditional finance—for example, making it easier to obtain banking services, insurance support, and even legally promote advertising resources that were previously restricted. These impacts will help improve the sustainability of the crypto industry ecosystem. Furthermore, a clear regulatory environment can also attract international compliant capital and enterprises to enter Australia. For some crypto companies seeking global expansion, Australia's new regulations provide a clear entry path—applying for an Australian Financial Services License (AFSL) and conducting business in Australia. Compared to jurisdictions with regulatory uncertainty, Australia's relatively sound legal system and investor market will be more attractive. Therefore, if the new bill is eventually passed, it will greatly assist Australia in becoming one of the hubs for digital asset business in the Asia-Pacific region.
In terms of the impact on consumers and investors, the introduction of the bill can also bring a series of positive effects. Among them, the most direct impact is the increased safety of funds—the new bill requires platforms to disclose detailed asset custody methods and strengthen internal risk controls, and the Australian Securities and Investments Commission (ASIC) will also monitor relevant platforms. Such regulations can reduce the likelihood of users suffering losses due to platform malfeasance or bankruptcy. Additionally, since licensed platforms need to report their operational status to regulatory authorities regularly, some information will also be made public, allowing the crypto asset market to develop further towards transparency, which in turn helps investors better compare the reliability and service quality of different platforms. In summary, regulation has provided a protective umbrella for consumers and investors, which will help cultivate a more mature and rational investment community in the long run.
However, it is important to note that not all impacts of the bill's introduction are positive; challenges also exist. For instance, after compliance costs rise, platforms may pass on some of these costs to users through increased withdrawal fees or reduced staking yields, which could, to some extent, dampen user enthusiasm for participation. Simultaneously, the speed of innovation may slow down: in a free market environment, the cost of experimenting with new products and services is low, but once under regulation, every new feature must consider compliance, which could delay industry innovation iterations. However, this 'slowdown' often results in 'steady and far-reaching' progress, sacrificing some aggressive growth during the wild growth phase in exchange for healthy development as the industry stabilizes and matures.
5. Future Trends of Australia's Crypto Regulation
Looking ahead, this article believes that Australia's cryptocurrency regulation will continue to develop along the lines of institutionalization, refinement, and international cooperation.
Institutionalization means that the regulatory framework will continue to improve and become the norm in law. Following the passage of the Digital Assets Bill, we expect that there may be further enhancements to related regulatory guidelines and secondary regulations in the future, including capital and reserve requirements for digital asset platforms (to prevent liquidity risk), independent third-party auditing requirements for custodial assets, and standard formats for information disclosure by platform operators. At the same time, the Australian government may further evaluate whether existing laws need to be amended to align with this. For example, whether the Australian (Bankruptcy Act) should add provisions to clarify customer digital asset priority rights in the event of a crypto exchange bankruptcy; or whether the definitions of terms related to digital assets in the Australian (Securities Act)(Tax Act) need to be unified with the new bill, etc. As time progresses, crypto assets may gradually be included in the regulatory frameworks of various relevant legal fields (such as inheritance, anti-fraud, accounting standards, etc.), thereby truly integrating into the economic system.
Refinement is reflected in regulation, which will continuously adjust strategies according to industry evolution. After initially establishing license regulation, the Australian Securities and Investments Commission (ASIC) and the Australian Treasury may further monitor industry risks in the next two to three years and respond to emerging issues. For example, stablecoin regulation may come to the forefront. Similarly, regulatory measures for DeFi may be further strengthened. Additionally, in the NFT and metaverse asset fields, if they exhibit financial functionalities (such as NFT fractional trading, NFT staking and lending), their regulation may also be included in discussions. Overall, regulators will continuously conduct research on the 'token mapping' in practice to clarify which new businesses need to be regulated and what kind of regulatory sandbox or guidelines are necessary for preliminary trials. This refined management will ensure that regulation does not lag too far behind the market while avoiding a one-size-fits-all approach that stifles innovation.
In terms of international cooperation, Australia may strengthen coordination with other jurisdictions. The essence of crypto assets is cross-border, and the regulatory measures of one country often require the cooperation of other countries to be effective. For instance, in terms of law enforcement cooperation: if an unlicensed foreign exchange provides services to Australian users, in the next two to three years, the Australian Securities and Investments Commission (ASIC) may need to collaborate with the regulatory authorities of the country where the exchange is located to take joint action. Currently, Australia is already a member of the Financial Action Task Force (FATF), the International Organization of Securities Commissions (IOSCO), and other bodies that are promoting global crypto regulatory standards. At the same time, the evolution of Australian regulatory policy may also refer to other international practices: for example, the experience of the EU's (Markets in Crypto-Assets Regulation, MiCA), the effects of Singapore's changes to licensing conditions, and the US's attitude towards decentralized protocols may all serve as references for Australia. It can be anticipated that in the near future, the crypto regulations of major economies will gradually converge, achieving a certain degree of mutual recognition of rules or interoperability of regulatory sandboxes.
Finally, from a macro perspective, with the implementation of this series of regulatory measures, Australia will gain greater initiative in digital economic transformation. The government views blockchain and digital assets as an important part of the future of finance, and improving regulation is a means of legitimizing and empowering it. It is foreseeable that once the regulatory framework matures, crypto assets are expected to achieve smoother integration with traditional financial assets—for example, security token offerings (STO), asset tokenization trading platforms operating in a compliant environment, traditional funds legally investing in digital assets, and banks safely conducting digital asset custody businesses, among others. These areas, which currently seem to be 'taboo zones' where traditional finance interacts with crypto, may potentially be opened up in the future, thereby unleashing greater market potential.
6. Conclusion
In summary, the recent dynamics of Australia's crypto asset tax system and regulation show significant trends towards normalization and proactivity. From maintaining the existing framework on taxation and emphasizing principle applicability to introducing the first dedicated legislative bill to fill regulatory gaps, various signs indicate that Australia is striving to keep pace with global crypto regulation. In this new regulatory era, practitioners will face higher compliance requirements and responsibilities, investors will gain stronger protection and confidence, and market operations will become more transparent and orderly. Amid challenges and opportunities, all parties involved in Australia's crypto industry need to adjust their strategies in a timely manner: enterprises should embrace regulation and improve internal governance to achieve legal status; investors should enhance risk awareness and choose compliant channels to participate in the market. In the coming years, we will continue to witness the evolution of Australia's crypto tax system and regulation, the experiences and lessons of which will provide valuable reference models for other countries.