Australia is moving to impose stricter regulations on cryptocurrency exchanges and issuers of stablecoins, following a new proposal unveiled by the Treasury Department on March 20, 2025. This effort comes as the government aims to bolster oversight of digital assets while striking a balance between fostering financial innovation and protecting consumers amidst rising risks associated with the sector.
Under this proposed framework, Australia’s government, led by the Labor Party, will regulate crypto exchanges and related firms under existing financial services laws, which includes implementing tighter compliance requirements akin to those faced by traditional financial institutions. This means that crypto exchanges, custody services, and certain brokerage firms involved in trading or storing cryptocurrencies will be required to adhere to the same standards as conventional financial entities. This includes obtaining an Australian Financial Services (AFS) License, establishing minimum capital reserves, and following complex rules that ensure the safety of customer assets.
In a statement released by the Treasury Department on March 21, it was clarified that the reforms aim to extend existing financial services laws to key digital asset platforms. However, smaller platforms which do not meet certain size thresholds will be exempt from these categorizations, as well as companies developing blockchain technology or creating digital assets that do not count as financial products.
A notable aspect of the proposed regulations is the treatment of stablecoins, which will be categorized as stored-value facilities under the government's Payments Licensing Reforms. Nevertheless, certain types of stablecoins and wrapped tokens will not fall under this classification. According to the Treasury, trading in these assets will not automatically classify platforms as market operators acting within a regulated trading environment, a point they highlighted to clarify the scope of the new regulations.
In response to the ongoing issue of debanking—where major financial institutions restrict or terminate services to crypto firms—the Albanese government has committed to collaborating with Australia's four largest banks. They seek to analyze the scope and nature of this practice, emphasizing the necessity for greater financial access for firms operating in the digital asset space.
The framework additionally includes plans for a review into a central bank digital currency (CBDC) and proposes the establishment of an Enhanced Regulatory Sandbox by 2025. This would allow businesses to trial new financial products in a controlled environment without needing a license, fostering innovation while ensuring compliance.
In light of significant potential changes on the horizon, the government intends to release a draft of the legislation for public consultation, opening up the discussion of these regulatory changes to industry stakeholders. Yet, a significant political shift may be forthcoming, as the nation is gearing up for a federal election scheduled for May 17, with recent polling indicating a neck-and-neck race between Prime Minister Anthony Albanese's Labor Party and the opposition Coalition led by Peter Dutton.
The Coalition has previously pledged to prioritize crypto regulation should they assume power, which could result in a shift in the proposed regulatory agenda as they explore their approach to digital currencies and assets.
The latest YouGov poll released on March 20 shows that the Coalition and Labor are effectively neck-in-neck with respect to voter preferences. While the Coalition leads in topline voting intentions, Albanese continues to be favored as preferred prime minister.
Speaking on the proposed reforms, Caroline Bowler, CEO of local crypto exchange BTC Markets, acknowledged the sensibility of the proposed changes stating that they should keep Australia competitive with its global peers. However, she noted that clarity around capital adequacy and custody requirements would be essential, emphasizing that “we need to ensure that these requirements aren’t overly burdensome for business investment in Australia.”
Kraken Australia's managing director, Jonathon Miller, also weighed in on the regulatory moves, stressing the pressing need for tailored legislation that addresses the pre-existing uncertainties within the Australian crypto landscape. He commented, “We believe that by establishing a clear crypto regulatory framework and mitigating problems like debanking, the government can remove the barriers hampering growth in the Australian economy.”
Simultaneously, Australia is focusing on clearer crypto regulations through a collaborative pilot program involving the Australian Treasury, Securities and Investments Commission (ASIC), and the Reserve Bank of Australia (RBA). This program will target the testing of tokenized money systems to streamline significant transactions in financial markets, aligning with similar international regulatory trends from the European Union and Singapore.
While the government has opted not to pursue a retail CBDC at this time, it considers a wholesale CBDC valuable enough to support upgrades to market infrastructure. The pilot will assess the ability of these new technologies to improve efficiency and reduce reliance on traditional intermediaries while allowing previously illiquid assets to be more accessible.
As Australia ushers in these new regulations, the industry anticipates a significant transformative impact on the country's digital currency ecosystem, fostering a more robust and structured environment for innovation. This evolution mirrors a larger global commitment to interoperability and transparency in digital financial markets.
Ultimately, as these legislative changes unfold, they will be closely monitored by industry participants and regulatory bodies, informing future policy directions. With both innovation and consumer protection at the forefront of these reforms, Australia's approach may well serve as a model for other countries navigating the complexities of regulating the rapidly evolving digital asset landscape.
