Australia passes the Corporations Amendment (Digital Assets Framework) Bill 2025, establishing the first comprehensive regulatory framework for digital assets and requiring crypto exchanges and custody providers to obtain Australian Financial Services Licences (AFSL).

Exchanges and custody providers must secure an Australian Financial Services Licence from ASIC, adhering to core rules similar to brokers or fund managers, including safeguarding client assets, standardized disclosures, prohibiting misleading conduct, and maintaining dispute resolution and compensation mechanisms.

The bill amends the Corporations Act and ASIC Act to regulate digital asset platforms, aiming to boost consumer protection, market integrity, and regulatory certainty.

Smaller players receive exemptions, such as low-value and incidental activity allowances, to protect startups from excessive licensing costs while preserving protections.

Regulators gain expanded powers to set custody, governance, and risk management rules, with civil penalties for noncompliance; smaller platforms receive some exemptions.

The law targets mid-ecosystem entities that control customer funds, not the crypto itself, to reduce risks like commingling, insolvency, and asset misuse seen in prior failures.

Industry reaction views the legislation as a major regulatory milestone, signaling clearer standards and stronger protections, with calls for broader reforms, including a stablecoin framework.

Crypto platforms must operate efficiently, honestly, and fairly, with clear disclosures on how customer assets are stored and robust governance and risk controls.

AML/CTF reforms, including the FATF Travel Rule, expand regulatory scope and require data sharing of sender/recipient information for transfers between exchanges.

An addendum clarifies that the framework applies to platforms that actually hold customer crypto, including shared-control setups like MPC, not merely controlling technology.

Regulatory reforms aim to address de-banking by raising compliance standards, encouraging banks to service licensed platforms.

Royal assent is pending, with the act to commence 12 months after assent, providing a transition period for firms to comply with the new licensing regime.