Australia plans to introduce new regulations for encryption assets: A preview of the "digital asset framework bill".

Written by: Fintax

In November 2025, the Australian Treasurer and the Minister for Financial Services formally submitted the “Corporations Amendment (Digital Assets Framework) Bill 2025” (hereinafter referred to as the “Digital Assets Framework Bill”) to the Federal Parliament, intending to include “digital asset platforms” and “tokenized custody platforms” within the scope of the Corporations Act. Specifically, it aims to place cryptocurrency trading and custody services under the regulation 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 supplement the regulatory framework for cryptocurrency transactions and custody services at the legislative level while maintaining the existing “current tax law treatment of crypto assets” tone. This marks Australia's further shift from the previous baseline regulatory model towards a comprehensive financial regulatory model focused on platforms and custody. This article will systematically outline the core content of the Digital Assets Framework Bill and the shift in regulatory philosophy it reflects, starting from Australia's existing tax system and regulatory framework for crypto assets. It will further assess the potential impact of this legislation on the compliance costs, business models, and cross-border strategies of cryptocurrency exchanges and custody institutions operating in Australia, providing insights and references for practitioners and researchers in the crypto industry.

1. The current regulatory framework for crypto assets in Australia

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, overall, Australia does not introduce a new tax specifically for cryptocurrencies, but prioritizes the application of existing ordinary tax laws to all cryptocurrency 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 formed an assessment report on the taxation issues of cryptocurrency transactions in 2024. The report concluded that the current tax laws in Australia generally address the taxation issues of cryptocurrency assets and related transactions, a view that was subsequently recognized by the Australian Treasury, which also believes that it is not appropriate at this stage to introduce special tax legislation for cryptocurrencies. Therefore, while the current tax laws in Australia acknowledge the uniqueness of cryptocurrencies, they will not introduce a “crypto tax” or establish large-scale special rules, but are more inclined to apply the existing tax law rules.

In terms of anti-money laundering and counter-terrorism financing (AML/CFT) regulation, Australia is one of the early countries to include Digital Currency Exchange (DCE) service providers in the AML/CFT regulatory framework. The 2018 amendment to the Australian anti-money laundering and counter-terrorism financing law first brought Digital Currency Exchange (DCE) service providers under regulatory oversight. This amendment stipulates that any institution engaged in fiat and cryptocurrency exchange activities 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 the registration of Digital Currency Exchange (DCE) service providers a mandatory prerequisite, and this requirement remains one of the key aspects of Australia's AML/CFT regulation for digital assets.

In terms of fragmented financial regulation, Australia’s existing laws primarily use “whether crypto businesses are similar to traditional financial products” as the main criterion for determining the applicability of financial regulatory laws: if a certain crypto asset essentially constitutes part of securities, derivatives, or managed investment schemes, then the relevant issuance, trading, and advisory activities will fall under the financial regulatory scope of the Australian Securities and Investments Commission (ASIC); conversely, typical “pure cryptocurrencies” (such as Bitcoin, ETH) and trading platforms not involving derivatives are often not regarded as financial products or financial service providers, and relevant financial regulatory norms do not apply.

In summary, Australia has initially established a multi-layered governance framework covering crypto assets through three dimensions: tax regulation, anti-money laundering and counter-terrorism financing regulation, and fragmented financial regulation, prior to the introduction of the “Digital Assets Framework Bill.” If the “Digital Assets Framework Bill” is ultimately passed, it will further unify the legal application standards in the field of crypto assets and clarify the regulatory boundaries and the obligations of the parties involved.

2. The “Digital Asset Framework Bill” aims to construct a regulatory framework for cryptocurrency trading.

The logic of the proposed digital asset framework bill can be briefly summarized as follows: first, define the platform, then regard the platform as a financial product, and finally use the Australian Financial Services License (AFSL) to further regulate the platform operators. At the same time, the content of the bill also reflects many attributes tailored for the crypto industry. Specifically:

Firstly, two new types of financial products have been introduced in the Company Law: Digital Asset Platform (DAP) and Tokenized Custody Platform (TCP). The Digital Asset Platform (DAP) refers to a “facility” where operators hold digital tokens on behalf of clients, typically exemplified by centralized cryptocurrency exchanges and custody wallet services. The key aspect of the Tokenized Custody Platform (TCP) lies in the “tokenization of real-world assets,” where operators typically identify an underlying asset (excluding currency), then create a digital token that represents the delivery rights of that asset, holding the underlying asset in custody. For example, using physical gold, real estate, or bonds as the underlying asset, corresponding tokens are issued, and investors can 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 on behalf of clients and tokenized assets as financial products for the first time, rather than simply applying existing financial regulatory frameworks to them.

As mentioned above, once digital asset platforms and tokenized custody platforms are recognized as financial products, “providing financial services related to such products” (including issuance, trading matching, custody, providing advice, etc.) will generally require holding an Australian Financial Services License (AFSL). The Australian Treasury has clearly stated that businesses providing services on the aforementioned platforms must obtain, in principle, an Australian Financial Services License (AFSL) and be subject to financial regulation by the Australian Securities and Investments Commission (ASIC), with applicable basic obligations consistent with traditional financial service providers. For CeFi exchanges and custodians, if the bill takes effect, they may need to align with traditional regulated financial institutions in terms of organizational structure, compliance departments, risk management, client asset segregation, information disclosure, and even dispute resolution.

Furthermore, the digital asset framework bill also reflects differentiated thinking at the institutional design level. Specifically, the bill provides an exemption from the Australian Financial Services License (AFSL) requirements for digital asset platforms that pose extremely low risks to customers. The exempted entities specifically include two categories of service providers: “businesses that fall under the low-value category (i.e., do not meet the specified financial thresholds)” and “service providers whose services do not constitute an important part of their business.” The first category applies to digital asset platform operators, while the second category applies to individuals providing services related to such platforms. At the same time, the bill stipulates that if a platform holds customer tokens and participates in staking or distributing profits on their behalf, it constitutes “custodial staking,” which falls under the business scope that should be regulated; however, if users manage their private keys and directly participate in staking on-chain, it is classified as “non-custodial staking,” which is not subject to this bill's adjustments. In addition, for “wrapped tokens” that grant holders redemption rights, the bill disregards the existence of the redemption rights when determining whether such tokens constitute financial products, instead focusing on their essential characteristics as assets or rights.

On the operational level, the bill simultaneously confirms that for open blockchain infrastructure such as Bitcoin and Ethereum, the bill will not directly classify them as financial market infrastructure or financial products, thereby avoiding the imposition of unworkable compliance obligations on the underlying open-source protocols. Additionally, if the “Digital Asset Bill” is passed, there will be an 18-month transition period after the reform is initiated.

3. The Regulatory Trend Reflected by the Introduction of the Bill on Cryptocurrency Assets in Australia

The introduction of the “Digital Asset Framework” bill marks a new stage in the regulation of cryptocurrency in Australia and reflects a significant shift in regulatory thinking over the past two to three years.

Firstly, this is a breakthrough from nothing to something. As mentioned earlier, Australia previously had no specific financial regulation in the field of cryptocurrency trading platforms and custody, with regulatory focus remaining on baseline areas such as anti-money laundering. This legislation marks the first time that cryptocurrency platforms have been included in mainstream financial regulation, indicating that the government has recognized the need for the digital asset industry to be subjected to strict supervision, just like traditional markets such as securities and derivatives. This shift has been driven to some extent by international trends and risk events: internationally, the European Union's introduction of the Markets in Crypto-Assets Regulation (MiCA) in 2023, the United States strengthening enforcement against cryptocurrency exchanges, and Asian financial centers such as Singapore gradually launching licensing systems all reflect a tightening global regulatory environment; domestically in Australia, Australian investors have been deeply involved in the cryptocurrency market over the past few years, and the collapse of some cross-border exchanges (such as FTX) has also affected Australian users, sparking calls from the public and political circles for stronger domestic regulation. Therefore, the Australian government has chosen to align with these trends and strengthen regulatory efforts in legislation, adjusting its previous laissez-faire attitude. The signal released by the new bill is clear: Australia no longer views the cryptocurrency industry as a special zone outside the financial system, but is gradually incorporating it into the unified regulation of the financial system.

Secondly, the regulatory tone in Australia and other countries has shifted from a wait-and-see approach to active governance. Looking back at the actions of the Australian government over the past two years, a gradual path can be observed: from the end of 2022 to the beginning of 2023, the Australian Treasury conducted research and consultation on “Token Mapping.” The so-called Token Mapping refers to sorting out the functions and legal attributes of various cryptocurrency tokens, assessing whether current regulations cover these attributes, and identifying regulatory gaps. At that time, the government’s position was to first clarify “what to regulate” before deciding “how to regulate.” The Token Mapping consultation report published in February 2023 is seen as a foundational document for subsequent policies, which suggested which tokens might need legislative oversight 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 the “Regulation of Digital Assets and Tokenized Custodial Platforms” published by the Australian Treasury in September 2025) and sought industry feedback. After several months of refinement, it was officially submitted to Parliament in November 2025. From these steps, it is evident that Australian regulators have moved from exploratory research to formal legislation, showing a clear advancement in their attitude. Especially after the Albanese government took office in 2022, there were concerns in the market that the new government would slow down the cryptocurrency regulatory pace proposed by the previous government, but the actual process indicates that the new government also recognizes the necessity of regulation and chooses to advance steadily. The shift from no regulations to having regulations 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 particularly emphasizes that this legislation will “strengthen consumer protection, modernize the regulatory system, enhance confidence, and attract investment.” It is clear that regulators do not intend to suppress the industry but are striving to find a governance model that balances protection and innovation. This trend aligns with many Western countries: embracing the economic opportunities brought by new technologies, but with the premise of setting up firewalls to prevent risks.

Thirdly, the new legislation reflects a slight adjustment in policy focus. Unlike a few years ago when the Australian government emphasized tax handling and combating illegal uses, the current policy focus has shifted towards the regulation of market institutions and investor protection. For example, earlier discussions centered more around issues such as how to tax cryptocurrency transactions and whether citizens were evading taxes through cryptocurrency; whereas recent measures (including legislative requirements for licensing and plans to strengthen the relationship between banks and the cryptocurrency industry) focus on establishing a fair and orderly market. This indicates a shift in regulatory “wind direction”: from viewing cryptocurrency as an emerging phenomenon and niche speculative tool to recognizing it as part of the mainstream financial ecosystem that requires regular regulation. At the same time, the government's understanding of the cryptocurrency industry has also become more comprehensive. For instance, the government has initiated research on central bank digital currency (CBDC), supported the Reserve Bank of Australia in piloting the digital Australian dollar (eAUD) in 2023, and plans to discuss the launch of a broader digital financial innovation trial environment in 2025. These measures suggest that the Australian government is attempting to achieve a dynamic balance between regulatory constraints and support for innovation. On one hand, there is strict oversight of cryptocurrency intermediaries, while on the other hand, space and policy support are reserved for new technological applications (such as CBDC and DeFi). It is expected that in the future, Australia's cryptocurrency regulation will no longer be a “vacuum zone” of neglect, but will resemble traditional financial markets with a comprehensive licensing management, risk monitoring, and international coordination mechanisms, while the authorities will also actively explore innovations to maintain their position in the global financial technology 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 State's requirements for crypto custody or the reserve requirements outlined in the European Markets in Crypto-assets Regulation (MiCA). Australia's decision to integrate crypto services into the existing financial licensing system (rather than creating an entirely new independent set of regulations) also reflects a convergence with the approaches of the UK and Singapore — utilizing a mature financial regulatory framework to oversee new types of assets, thereby ensuring regulatory consistency and cross-market collaboration. With the Financial Action Task Force (FATF) pushing countries to implement the “travel rule” (the requirement for disclosure of crypto transfer information) and the G20 discussing global crypto regulatory standards, Australia's new legislation also makes its domestic regulatory framework more aligned with international standards. For instance, when the Australian Transaction Reports and Analysis Centre (AUSTRAC) must expand its regulatory scope starting in 2026, Australia will largely meet the FATF's requirement for comprehensive regulation of Virtual Asset Service Providers (VASPs).

Overall, Australia’s regulatory stance has shifted from being a bystander to an active participant: proactively shaping rules through legislation and policies rather than merely waiting for international consensus. This change helps Australia to have a greater voice in the global dialogue on digital asset governance and to promote itself as a “trusted and competitive center for digital asset innovation.”

4. The Impact of Legislation on Practitioners in the Cryptocurrency Industry

The introduction of the new regulatory framework will have a profound impact on the cryptocurrency industry in Australia in both the short and long term.

In terms of short-term impact, the cryptocurrency asset industry in Australia will face compliance pressure and opportunities for industry reshuffling. For cryptocurrency exchanges and custodians currently active in the Australian market, obtaining an Australian Financial Services License (AFSL) and complying with new regulations will become a new threshold. 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 strategies, compliance frameworks, and qualification proofs of responsible personnel. This will be a significant test for the compliance teams and legal advisors of companies. Some smaller or resource-limited practitioners may choose to exit the market or shift to serving overseas clients, leading to industry consolidation. In contrast, larger practitioners will invest funds and manpower to actively apply for licenses and adjust internal processes in advance to meet requirements. These measures may increase operational costs but can also enhance the robustness of the platform. Meanwhile, under the government-backed licensing system, future Australian investors may be more inclined to choose exchanges and custodians that have obtained an Australian Financial Services License (AFSL) for trading, as these institutions are regulated by the Australian Securities and Investments Commission (ASIC), thereby possessing higher credibility and security. Companies that fail to obtain a license will be viewed as underground or offshore platforms, making business operations increasingly difficult—not only due to insufficient customer confidence but also because traditional financial service providers, such as banks, will be more cautious in considering the compliance risks associated with partnering with them. Therefore, the new policy will promote a survival of the fittest in the industry: compliant operators are expected to expand their market share, while non-compliant ones will gradually be eliminated or pushed into gray areas.

In terms of medium to long-term impact, Australia’s cryptocurrency industry will gain more opportunities for regulated development and international cooperation. In the long run, government regulation will help standardize and scale the digital asset industry. On one hand, with enhanced investor protection, user trust will increase, and more mainstream institutions and individuals may feel confident to participate in crypto investments, thereby expanding the market size. On the other hand, licensed operations can help crypto companies connect with traditional finance— for example, more easily obtaining banking services, insurance support, and even legally promoting advertisements, which were previously restricted resources. These impacts will help improve the sustainability of the crypto industry ecosystem. Additionally, a clear regulatory environment can attract international compliant capital and businesses to enter Australia. For some cryptocurrency companies seeking global expansion, Australia’s new regulations provide a clear entry pathway, namely applying for an Australian Financial Services License (AFSL) and conducting business in Australia. Compared to jurisdictions with regulatory uncertainty, Australia’s relatively complete legal system and investor market will have a stronger appeal. Therefore, if the new bill is ultimately passed, it will greatly assist Australia in becoming one of the hubs for digital asset businesses in the Asia-Pacific region.

In terms of its impact on consumers and investors, the introduction of the bill can also bring about a series of positive effects. Among these, the most direct impact is the increase in fund security — the new bill requires platforms to disclose in detail the methods of asset custody and strengthen internal risk control, while the Australian Securities and Investments Commission (ASIC) will also supervise relevant platforms. Such regulations can reduce the probability of users suffering losses due to platform malfeasance or bankruptcy. Additionally, since licensed platforms are required to report their operational status to regulatory authorities regularly, some information will also be made public, allowing the cryptocurrency market to further develop towards transparency, which helps investors better compare the reliability and service quality of different platforms. In summary, regulation provides a protective umbrella for consumers and investors, which, in the long run, helps cultivate a more mature and rational investment community.

However, it is important to note that not all the impacts of the legislation are positive, and challenges also exist. For example, after the increase in compliance costs, platforms may pass some of these costs onto users through higher withdrawal fees and lower staking yields, thereby reducing user participation enthusiasm to some extent. At the same time, the pace of innovation may slow down: in a free market environment, the cost of experimenting with new products and services is relatively low, but after being regulated, every new feature launched must consider compliance, which may delay the innovation iteration in the industry. However, this “deceleration” often comes with “steady and far-reaching” benefits, meaning sacrificing some aggressive growth during a wild growth phase for the healthy development of the industry as it stabilizes towards maturity.

5. The Future Direction of Cryptocurrency Regulation in Australia

Looking to the future, this article believes that cryptocurrency regulation in Australia will continue to develop in the direction of institutionalization, refinement, and international cooperation.

Institutionalization means that the regulatory framework will continue to improve and rise to the level of legal norms. After the passage of this digital asset bill, we expect that there may be further improvement of relevant supporting regulatory guidelines and secondary regulations in the future, including capital and reserve requirements for digital asset platforms (to prevent run risks), independent third-party audit requirements for custodial assets, and standard formats for information disclosure by platform operators. At the same time, the Australian government may further assess whether existing laws need to be revised to align with this. For example, should the Australian Bankruptcy Act add provisions to clarify the priority of customer digital assets in the event of a cryptocurrency exchange's bankruptcy; furthermore, should the definitions of terms related to digital assets in the Australian Securities Act and Tax Act be unified with the new bill? As time progresses, crypto assets may gradually be incorporated into the regulatory scope of various relevant legal fields (such as inheritance, anti-fraud, accounting standards, etc.), thereby truly integrating into the economic system.

Refinement is reflected in the fact that regulators will continuously adjust strategies based on industry evolution. After initially establishing licensing 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 new issues. For example, the regulation of stablecoins may be prioritized. Additionally, regulatory measures for DeFi may be further strengthened. Furthermore, in the fields of NFTs and metaverse assets, if they exhibit financial functions (such as NFT fractional trading, NFT collateral lending), their regulation may also be included in the discussion scope. Overall, regulators will continuously conduct “token mapping” research in practice to clarify which new businesses need to be regulated, and what kind of regulatory sandbox or guidelines are needed for preliminary experimentation. This refined management will ensure that regulation does not lag too far behind the market while avoiding a one-size-fits-all approach that hinders innovation.

In terms of international cooperation, Australia may strengthen its coordination with other jurisdictions. The nature of crypto assets is cross-border, and the regulatory measures of one country often require cooperation from other countries to be effective. For example, in law enforcement cooperation: if an unlicensed foreign exchange provides services to Australian users, the Australian Securities and Investments Commission (ASIC) may need to collaborate with the regulatory authority in the country where the exchange is located to take joint action in the next two to three years. Currently, Australia is already a member of organizations such as the Financial Action Task Force (FATF) and the International Organization of Securities Commissions (IOSCO), which are all promoting global crypto regulatory standards. At the same time, the evolution of Australian regulatory policies may also refer to other international practices: for example, the experience of the European Union's Markets in Crypto-Assets Regulation (MiCA), the effects of Singapore's changes to licensing conditions, and the United States' 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 the digital economy transformation. Blockchain and digital assets are seen by the government as an important part of future finance, and improving regulation is to legitimize and empower them. It can be anticipated that once the regulatory framework matures, crypto assets are expected to integrate more smoothly with traditional financial assets — for example, security token offerings (STO), asset tokenization trading platforms operating within a compliant environment, traditional funds being able to legally invest in digital assets, banks safely conducting digital asset custody services, and so on. What currently seems to be a “taboo” area of “traditional finance touching crypto” may open up in the future, thus unleashing greater market potential.

6. Conclusion

In summary, the recent dynamics of Australia's crypto asset tax system and regulation show a significant trend towards normalization and proactivity. From maintaining the existing framework and emphasizing the applicability of principles from a tax perspective, to introducing the first dedicated legislation and filling institutional gaps from a regulatory perspective, various signs indicate that Australia is making every effort to catch up with the global pace of 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. Amidst the coexistence of challenges and opportunities, all parties involved in Australia's crypto industry need to timely adjust their strategies: companies should embrace regulation and improve internal governance to obtain legal status; investors should also enhance their 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, and its experiences and lessons will provide valuable reference paradigms for other countries.