TLDR:
- Over 400 Australian crypto exchanges may need financial licences, forcing many smaller players out of the market.
- New laws will bring exchanges under ASIC oversight, with penalties for misleading conduct and unfair contracts.
- Platforms under $10M yearly volume and $5K per customer balances are exempt from the new compliance regime.
- BTC Markets and Independent Reserve back the rules, saying they will boost trust and clean up the sector.
Australia is moving to tighten control of its crypto sector, with new rules set to reshape how exchanges operate. The government revealed a draft law that will force most crypto platforms to apply for a financial services licence. This comes as regulators seek to give investors more protection after a string of global exchange collapses.
Large players welcome the move, saying it will level the playing field. Smaller operators, however, may struggle to keep up with the new costs.
Crypto Exchanges Must Get Licenced
Under the proposed framework, crypto exchanges will need to apply for an Australian Financial Services Licence (AFSL).
The licence will be issued by the Australian Securities and Investments Commission (ASIC), according to a report by Financial Review. Until now, exchanges only had to follow anti-money laundering and know-your-customer rules under AUSTRAC oversight.
Law firm Thomson Geer partner Liam Hennessy said compliance costs could be too heavy for small players. He described the measure as a “consolidation machine” likely to push weaker platforms out of the market. The government said exchanges will have to act “efficiently, honestly and fairly” or risk penalties for misconduct.
BTC Markets and Independent Reserve, two of Australia’s largest exchanges, have backed the legislation. They said tougher oversight will build confidence and protect users from poorly run operations.
Exemptions and Token Rules
The draft law includes carve-outs for very small exchanges. Platforms that hold under $5,000 per customer and process less than $10 million per year will not need a licence. This is meant to ease the burden on hobby operators and niche trading services.
The government decided not to regulate crypto tokens directly, focusing instead on the platforms that list them. Tokens that act like financial products will remain under existing laws, with ASIC due to clarify which assets fall under that definition in November.
Assistant Treasurer Daniel Mulino said the reforms aim to support growth while reducing investor risk. He added that the rules will help separate compliant platforms from bad actors and create more certainty for businesses.
Australia is also preparing a broader payments licensing regime that will cover stablecoins. The Australian Prudential Regulation Authority could oversee stablecoin issuers once stored-value facility rules are finalised.
Kate Cooper, CEO of OKX Australia, said the move shows crypto is no longer a fringe industry but part of the financial system. She added that enforcement will be key to making sure licensed operators are not undercut by unregulated competitors.