Australia is cracking down on cryptocurrency exchanges with new rules designed to bring them in line with traditional financial institutions. These changes aim to protect consumers and weed out bad actors in the crypto space.
What’s Changing?
The government’s plan will force crypto exchanges and custody providers to get a license and follow stricter rules. This means they’ll have to:
- Get Licensed: Exchanges will need an Australian Financial Services License (AFSL).
- Follow Stricter Rules: They’ll have to adhere to new conduct standards designed to protect customer assets.
- Increase Transparency: They’ll need to provide clearer information to users about their services.
- Hold Customer Assets Safely: New rules will govern how exchanges handle and safeguard customer crypto.
Two new categories are being created: “digital asset platforms” and “tokenized custody platforms,” both falling under the Australian Securities and Investments Commission (ASIC) oversight.
Big Penalties for Breaking the Rules
Breaking these new rules will be expensive. Companies face penalties of whichever is greater:
- A$16.5 million
- Three times the profit made from the breach
- 10% of their annual turnover
This tough penalty system aims to deter major violations. However, a small exemption exists for very small operators handling less than A$5,000 per customer and under A$10 million in yearly transactions. Exactly how “turnover” will be calculated (global or just Australian revenue) is still unclear, which is a major concern for international exchanges.
Specific activities like staking, wrapped tokens, and public token infrastructure will also be subject to specific regulations. The government plans to keep the framework flexible, allowing adjustments as risks evolve.
Industry Reaction and What’s Next
The crypto industry’s response has been mixed. Some welcome the clarity these new rules provide, hoping it’ll boost growth. Others worry about the high compliance costs, particularly for medium-sized businesses.
The government is accepting feedback on the draft rules until October 24, 2025. After reviewing the submissions, they’ll finalize the legislation.
