Australia has unveiled draft legislation that could reshape how digital asset platforms operate in the country. The proposal, released on Thursday by the Treasury, outlines strict rules for licensing, compliance, and penalties.
The most striking feature is the potential punishment of up to 10% of annual turnover for breaches of the law.
This comes as Australia seeks to tighten oversight of exchanges and tokenised custody platforms, amid rising concerns from regulators over money laundering, terrorism financing, and consumer protection.
The consultation period will remain open until 24 October, inviting detailed industry feedback.
Penalties tied to turnover and conduct
Under the draft rules, all digital asset platforms operating in Australia will be required to obtain an Australian Financial Services Licence.
This framework will place them under the Corporations Act, aligning them more closely with traditional financial institutions and existing regulatory standards.
Breaches of the licence conditions—such as failing to act “honestly and fairly” or engaging in “misleading and deceptive conduct and unfair contract terms”—could trigger penalties.
These would be set at the greater of A$16.5 million ($10.9 million), three times the benefit obtained, or 10% of a firm’s annual turnover.
Exemptions will be available for smaller platforms that hold less than A$5,000 per customer and process under A$10 million in transactions annually.
Regulators push for stronger safeguards
The move follows repeated calls from Australia’s financial crimes agency, central bank, and other regulators to curb risks associated with digital assets.
In August, Binance’s Australian arm was ordered to appoint an external auditor due to concerns about compliance with anti-money laundering and counter-terrorism financing laws.
By placing crypto exchanges and tokenised custody providers under the same laws as traditional financial services, the government aims to expand consumer protection and reduce financial crime significantly.
Global exchanges under scrutiny
Global players such as Coinbase Global Inc. and Kraken already operate in Australia and will be directly affected by the legislation.
Coinbase’s Australian country director, John O’Loghlen, stressed that regulation can support economic growth and help maintain Australia’s global competitiveness.
Kraken’s Jonathon Miller noted that the new framework follows an extensive consultation process between industry and government representatives.
These comments highlight the extent to which international exchanges are engaged in shaping Australia’s evolving regulatory environment.
Next steps for the legislation
The consultation period runs until 24 October, after which the Treasury will assess feedback from industry participants.
If adopted, the law would represent one of the most significant shifts in Australia’s approach to digital assets, creating a comprehensive framework that combines licensing with severe penalties for non-compliance.
The Treasury has emphasised that the new rules are intended to provide clarity and stability for investors while ensuring that digital asset platforms meet the same standards expected of other financial service providers in Australia.
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