Australia Introduces Crypto Custody Law with Steep Penalties for Violations
Australia has taken a significant step towards regulating its cryptocurrency industry with the introduction of a new law that promises stricter oversight and heavy penalties for failures to protect assets. The government aims to increase productivity while strengthening investor protections, with the proposed reforms expected to deliver up to $24 billion in annual productivity gains.
The Corporations Amendment (Digital Assets Framework) Bill 2025, introduced by Treasurer Jim Chalmers and Financial Services Minister Daniel Mulino, establishes the country’s first comprehensive regulatory framework for companies that hold crypto on behalf of customers. The bill requires crypto firms to have an Australian Financial Services License (AFSL) and comply with the supervision of the Australian Securities and Investments Commission (ASIC).
Key Provisions of the Bill
The bill introduces two new license categories: Digital Asset Platform and Tokenized Custody Platform, reflecting the different roles that firms play in the custody and transfer of customer funds. Licensed firms will have to comply with ASIC standards for transactions, settlement processes, and asset custody. They will also be required to provide their customers with a service guide outlining fees, risks, and asset management.
Small operators will receive more lenient treatment, with companies that handle annual transaction volumes of less than 10 million Australian dollars (US$6.5 million) exempt from the licensing requirements. Companies whose crypto activities are related to non-financial services will also be exempt. The bill provides an 18-month grace period before the licensing requirements take effect, making the transition easier for compliant businesses.
Industry Reaction and Next Steps
The local industry has largely welcomed the draft, although some participants have called for simpler rules and clearer definitions. The bill is expected to pass in the House of Representatives, where Prime Minister Anthony Albanese’s Labor Party has a strong majority. However, the tougher fight will be in the Senate, where Labor may need the support of crossbenchers and opposition lawmakers to enact the reforms.
Meanwhile, the Australian Securities and Investments Commission (ASIC) has taken down over 14,000 scam and phishing websites since July 2023, with cryptocurrency-related scams accounting for 20% of the removals. The government has also announced upcoming legislation to regulate crypto ATMs, calling them “high-risk products” linked to money laundering and child exploitation.
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