Australia Introduces Crypto Custody Bill With Heavy Penalties For Breaches

What Happened

Australia has introduced its first full regulatory framework for crypto custody and exchange platforms.

Lawmakers say the reforms aim to boost productivity while strengthening investor protection.

Treasurer Jim Chalmers and Financial Services Minister Daniel Mulino on Wednesday introduced the Corporations Amendment (Digital Assets Framework) Bill 2025, which establishes the country’s first comprehensive regulatory framework for companies that hold crypto on behalf of customers.

The legislation follows a Treasury consultation launched in September, which Mulino previously described as the “cornerstone” of the government’s digital asset roadmap.

At the heart of the bill is a licensing overhaul. Crypto exchanges and custody providers will be required to obtain an Australian Financial Services License (AFSL), bringing them under the supervision of the Australian Securities and Investments Commission (ASIC).

The framework introduces two new license categories, “digital asset platform” and “tokenized custody platform,” reflecting the different roles firms play in holding and moving customer funds.

Last month, Home Affairs Minister Tony Burke announced upcoming legislation to regulate crypto ATMs, calling them “high-risk products” tied to money laundering and child exploitation.

Market Context

Small operators would receive lighter treatment. Firms handling less than A$10 million ($6.5 million) in annual transaction volume would be exempt, as would businesses whose crypto activity is incidental to non-financial services.

Why It Matters

The government says the proposed reforms could unlock as much as $24 billion in annual productivity gains while strengthening safeguards for Australians who entrust digital assets to private platforms.

Platforms would also be required to provide customers with a service guide outlining fees, risks, and how assets are managed.

The legislation is expected to pass the House, where Prime Minister Anthony Albanese’s Labor Party holds a strong majority.

The tougher contest will be in the Senate, where Labor may need support from crossbenchers and opposition lawmakers to see the reforms enacted.

Details

Australia has moved to tighten its grip on crypto exchanges and custody providers with legislation that promises tougher oversight and steep penalties for failures in asset protection.

Key Takeaways:

The bill would require crypto firms to hold an AFSL and comply with ASIC supervision.

Australia’s Crypto Bill Advances to Second Reading in Parliament

The bill passed its first reading in Parliament and immediately proceeded to a second reading, opening debate on its core principles before detailed examination.

“We take Australia’s crypto industry seriously,” the ministers said in a joint statement, adding that blockchain and digital assets present “big opportunities for our economy, our financial sector, and our businesses.”

While the local industry broadly welcomed the draft, several participants called for simpler rules and clearer definitions.

Mulino said the reforms target companies that control customer assets “rather than the underlying technology.”

He warned that “it’s currently possible for a company to hold an unlimited amount of client crypto without any financial law safeguards.”

New Australia Bill Sets Custody and Disclosure Rules for Crypto Firms

Under the bill, licensed firms would have to comply with ASIC standards for transactions, settlement processes, and asset custody.

The bill also includes an 18-month grace period before licensing rules take effect, which Mulino said is meant to ease the transition for compliant companies.