Australia Plans Stricter Crypto Exchange and Stablecoin Rules

Australia to Tighten Licensing Rules for Crypto Exchanges and Stablecoin Issuers

Australia is taking steps to introduce stricter licensing regulations for cryptocurrency exchanges and stablecoin issuers as part of a proposed regulatory overhaul. On March 20, the Treasury released a policy paper detailing plans to align key segments of the digital asset industry with existing financial services laws. These changes aim to manage risks, protect consumers, and uphold market integrity while fostering innovation in the sector.

New Licensing Requirements for Crypto Platforms

Under the proposed framework, cryptocurrency platforms that hold digital assets on behalf of customers—such as exchanges, custodians, and certain brokerages—will be required to obtain an Australian Financial Services Licence (AFSL). This move seeks to ensure that these platforms comply with robust regulatory standards, offering greater protection to their users.

Additionally, issuers of tokenized stored-value facilities—like some stablecoins—will also fall under the new regulations. These issuers must adhere to the same requirements as traditional stored-value providers, which include clear rules for redeeming value and safeguarding customer assets. Authorities emphasized that these measures are designed to address the unique risks posed by digital asset platforms and tokenized stored-value facilities.

Exemptions and Tailored Requirements

While the proposed framework introduces stricter oversight, not all entities within the blockchain ecosystem will be subject to regulation. Businesses that create digital assets for non-financial purposes, maintain blockchain infrastructure, or develop software will remain outside the scope of these laws.

Small-scale and early-stage platforms may also receive exemptions from full licensing requirements. However, these entities may still need to comply with tailored rules to ensure consumer protection and market integrity. This approach aims to strike a balance between supporting innovation and mitigating potential risks.

Stablecoins and Payment Systems

Stablecoins used for payment purposes will face similar oversight as traditional non-cash payment systems. These tokens will be treated as stored-value facilities under broader payment reforms. However, trading stablecoins or dealing with them in secondary markets will not automatically classify these activities as financial dealing, meaning platforms listing stablecoins or wrapped tokens won’t necessarily be treated as financial markets.

A draft version of the proposed legislation is expected to be released by 2025, with implementation timelines to be determined after the finalization of the law.

Tackling the Issue of De-Banking

The Australian government is also addressing the ongoing challenge of de-banking, a practice where financial institutions deny services to cryptocurrency businesses. Over recent years, major banks such as Commonwealth Bank, Westpac, NAB, and HSBC Australia have either restricted or entirely cut off services to crypto-related entities. This has created significant obstacles for the industry.

Authorities acknowledged the negative impact of de-banking, stating, “De-banking can have a devastating effect on businesses and individuals, stifle competition, and hinder innovation in the financial services sector.” The proposed regulatory framework aims to strengthen risk management practices across the crypto industry, fostering greater trust between financial institutions and crypto businesses.

Future Outlook for Australia’s Crypto Sector

Looking ahead, Australian regulators plan to explore several key developments in the cryptocurrency and blockchain space. These include examining how tokenization could transform asset markets, assessing tax reporting standards for crypto, monitoring the growth of decentralized finance (DeFi), and evaluating the potential benefits of a central bank digital currency (CBDC) for the nation’s financial system.

The proposed reforms mark a significant step in Australia’s efforts to create a safer and more transparent environment for digital asset users while encouraging the responsible growth of the cryptocurrency industry.