In September 2025, Australia released draft legislation on digital assets that is about to change the cryptocurrency industry. The proposed law puts exchanges under the same standards as traditional financial services.
Digital platforms, token issuers, and other custodians are now required to obtain an Australian Financial Services Licence (AFSL). The move is aimed at ensuring crypto firms offer better consumer protections.
The bill is expected to offer regulatory clarity to an industry that desperately needs it. Assistant Treasurer Daniel Mulino said the draft law will be the “cornerstone” for Prime Minister Anthony Albanese’s digital assets roadmap.
“This is about legitimising the good actors and shutting out the bad,” Mulino said in an address to the Global Digital Asset Regulatory Summit. “It is about giving businesses certainty and consumers confidence.”
The draft creates obligations for digital exchanges, custodians, and even superannuation funds that invest in crypto. Companies that run afoul of the new law could face fines of up to 10% of annual revenue.
DAPs and TCPs Licensing
The draft legislation is set to explicitly regulate Digital Asset Platforms (DAPs) and Tokenised Custody Platforms (TCPs) as new categories of financial product services. This would bring them under the same consumer protection rules that apply to traditional finance. As a result, firms operating with digital asset platforms need an Australian Financial Services Licence (AFSL).
Besides licensing, the draft spells out the obligations around custody, settlement, disclosure, governance, conduct, and risk management.
Exchanges and custodians that hold tokens on behalf of clients would now need to meet the same standards as brokers and fund managers. However, the government has chosen to exempt small platforms handling less than A$5,000 per client. Additionally, firms making less than A$10 million in annual revenue would be spared from the full licensing obligations.
Obligations for Custodians
Custodians or firms that safekeep digital assets on behalf of holders are squarely in the crosshairs of this draft law. These firms fall under TCPs and will be required to meet trust, segregation, audit, and disclosure requirements. On top of that, they must demonstrate operational resilience to even think about getting a licence under the draft law.
Custodians must also be transparent on how client assets are held and transferred. Are the assets safe from misappropriation? Or hacking? These are some of the questions TCPs must answer as the bill makes its way through parliament.
The draft law also set out rules for staking, wrapped tokens, and public token infrastructure. Licensed custodians must ensure that the risk systems, audit trails, and dispute processes meet standards comparable to traditional fund custody or securities depositories.
Effects on Super Funds
The draft legislation will also impact superannuation funds that hold digital assets. Although the bill doesn’t directly regulate the funds themselves, there will be some downstream effects.
The bill mainly impacts self-managed super funds (SMSFs) that rely on platforms and custodians. Super funds that use platforms that do not meet licensing requirements will find some of the activities restricted.
Some digital asset service providers used by SMSFs might also choose to exit the market instead of seeking a licence.
But there are positives too. One is that SMSFs will see stronger assurances from platforms about the safety of their holdings.
Compliance Checklist: What Each Must Do Now
The main market players now have new responsibilities.
Exchanges
Exchanges should evaluate their current services and identify those that might fall under “digital asset platform”. After that, exchanges should structure governance to ensure the platform operates reliably and transparently, protecting consumers.
Additionally, exchanges should keep the digital assets of their customers separate from the exchange’s own assets. While this will help ensure compliance under the new bill, it will also immediately reduce the risk of misuse and increase transparency. One way exchanges can go about this is to use separate wallets or accounts and put in place multi-signature controls.
Exchanges must also ensure they maintain enough liquidity to cover potential losses. This will ensure the exchange can meet withdrawal requests, absorb losses, and remain solvent.
Legislators also want exchanges to prove they can be resilient against cybercrimes. Regulators will be looking at more than just firewalls, encryption, and a platform’s ability to detect intrusion. Exchanges must also ensure their staff are trained on best practices. Additionally, digital asset platforms will be required to do regular vulnerability tests.
The draft also requires exchanges to publish disclosure policies and fees and have dispute systems.
Ensuring compliance is undoubtedly going to cost a pretty penny. Luckily, the government exempts small operators from most obligations.
Custodians
The bill requires custodians to make sure their operations do not violate trust. They should also be auditable and transparent on how client assets are held and moved.
Like exchanges, custodians must keep client assets away from their own. In addition, they should also do regular audits performed by third parties.
If your firm offers staking or token-wrapping services, these should align with how the law frames obligations, including licensing, disclosure, and client asset protection.
Super Funds / SMSFs
The bill might not directly regulate super funds, but they are exposed to exchanges and custodians who are. When picking a service provider, SMSFs should insist on compliance documents, audit reports, and certifications.
Super funds should also start making contingency plans in case their current providers fail licensing.
Where This Leaves the Industry
The draft digital assets law aims to move crypto from the fringes into Australia’s mainstream financial services. On the flip side, exchanges and custodians must meet strict obligations to protect customers and build trust. While compliance itself may not be cheap, it may help Australians who have so far been unconvinced by the crypto industry to take another look, driving up investments and liquidity.
