Australia’s government has taken a significant step toward regulating its rapidly evolving cryptocurrency sector, unveiling a proposed framework that places digital asset exchanges under the country’s existing financial services laws. Spearheaded by Prime Minister Anthony Albanese’s center-left Labor Party, the reform package is the culmination of over a year of consultations and could reshape the country’s crypto landscape—just weeks before a tightly contested federal election.
The Treasury Department released the framework on March 21, detailing how the new regime will bring crypto exchanges, custody providers, and certain brokers into the fold of the nation’s established financial services regulations. The move comes as both major political blocs—the ruling Labor Party and the opposition Coalition—vie for support ahead of a federal election expected on or before May 17.
Current polling suggests a dead heat between the two parties, with a recent YouGov survey showing near-identical support levels for Labor and the Coalition on a two-party preferred basis. This heightens the stakes for digital asset regulation, which both sides now view as a key component of future economic and technological policy.
Key Features of the New Crypto Framework
Under the proposed framework, digital asset platforms will be required to obtain an Australian Financial Services Licence (AFSL), the same type of regulatory approval needed by traditional financial institutions in the country. These platforms must also meet minimum capital requirements, comply with strict asset custody rules, and maintain operational standards that safeguard consumer assets.
“Our legislative reforms will extend existing financial services laws to key digital asset platforms, but not to all of the digital asset ecosystem,” the Treasury said in its statement.
This distinction reflects a calibrated approach. The government will not subject every player in the crypto space to regulation. Smaller startups and experimental blockchain projects that do not cross specific operational or financial thresholds will be exempt. The same applies to companies building blockchain infrastructure or issuing digital tokens that don’t qualify as financial products.
Treasury officials have positioned this measured strategy as an attempt to balance innovation with consumer protection. By targeting major exchanges and service providers—while allowing smaller players breathing room—the government aims to encourage growth without creating insurmountable barriers to entry.
Treatment of Stablecoins and Wrapped Tokens
The framework also clarifies the regulatory treatment of stablecoins, which are digital assets typically pegged to a fiat currency like the Australian dollar or the U.S. dollar. According to the proposed reforms, payment stablecoins will be regulated as stored-value facilities under Australia’s Payments Licensing Reforms.
However, not all stablecoins will face the same scrutiny. The government said that certain stablecoins, along with wrapped tokens—cryptocurrencies that represent other assets on different blockchains—will receive exemptions under the new framework. Specifically, trading or dealing in these products will not, in itself, trigger licensing or classification as a market operator.
This nuance signals a recognition of the layered nature of digital finance, where not all transactions imply risk to consumers or systemic exposure. “Platforms where they [wrapped tokens and exempt stablecoins] are traded will not be treated as operating a market simply because of that trading activity,” the Treasury clarified.
Tackling De-banking and Digital Innovation
Alongside regulatory clarity for crypto, the Albanese government has pledged to tackle the persistent issue of de-banking. Over the past several years, Australia’s major financial institutions have been criticized for closing the accounts of crypto-related businesses without clear explanations, citing risk concerns.
To address this, the government will collaborate with Australia’s four largest banks to investigate the scope and underlying causes of de-banking. The goal is to ensure fair access to banking services for crypto firms, especially those that meet compliance standards.
In addition, the government will roll out an Enhanced Regulatory Sandbox in 2025, allowing fintech and crypto businesses to trial new financial products in a controlled environment without needing full licensing upfront. This sandbox could fast-track innovation in Australia’s digital finance sector by reducing the cost and time required to bring new ideas to market.
Another forward-looking element is the planned review of a central bank digital currency (CBDC). While the Reserve Bank of Australia has previously conducted exploratory work in this area, the new regulatory push signals a renewed interest in understanding how a digital Aussie dollar might coexist with private cryptocurrencies.
Election Looms: Crypto Becomes a Political Battleground
Although the government has not yet tabled a final version of the legislation, a draft will be released for public consultation soon. However, its fate could rest on the outcome of the upcoming election.
Opposition leader Peter Dutton and his center-right Coalition have also expressed strong support for crypto regulation, albeit with a slightly different tone. The Coalition previously promised to prioritize tailored legislation specifically for digital assets, aiming to address what they describe as regulatory uncertainty and slow government response.
Both major parties appear to recognize the importance of digital assets as a strategic industry—economically and politically. Crypto adoption in Australia has grown steadily, with millions of retail investors now holding digital assets and several local exchanges gaining traction both domestically and abroad.
The bipartisan interest could ensure that some form of crypto regulation advances regardless of which party forms the next government. However, differences in implementation, emphasis, and industry support may hinge on the electoral outcome.
Industry Responds: Cautious Optimism
Initial reactions from the crypto industry show cautious optimism. Caroline Bowler, CEO of local exchange BTC Markets, praised the direction of the reforms, calling them “sensible” and likely to keep Australia competitive with global peers. However, she flagged that further details will be critical—especially around capital adequacy and custody.
“We need to ensure that these requirements aren’t overly burdensome for business investment in Australia,” Bowler said in a statement shared with Cointelegraph.
Kraken Australia’s Managing Director, Jonathon Miller, echoed this sentiment, arguing for clearer and more bespoke crypto legislation to eliminate the current gray zones.
“There’s an urgent need for bespoke crypto legislation,” Miller said. “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.”
Industry voices seem aligned on one point: clarity is better than ambiguity. Whether the proposed reforms go far enough—or too far—will become clearer as the legislation moves into the public consultation phase.
What’s Next for Australia’s Crypto Industry?
The next two months will be pivotal. The proposed regulatory framework signals a maturing approach to digital assets, aiming to balance innovation, investor protection, and global competitiveness. However, with an election on the horizon, political uncertainty could delay or alter the rollout.
Regardless of who wins, Australia has reached a turning point. After years of fragmented oversight and industry frustration, the nation is finally laying the groundwork for a structured, modern crypto economy.
The world will watch closely as Australia moves forward—not just as a market with high crypto adoption, but as a regulatory test case for other advanced economies exploring how best to integrate digital assets into their financial systems.
