The Australian Government has embarked on a comprehensive plan to regulate and incorporate digital assets into its economy, drawing inspiration from initiatives in the European Union (EU) and Singapore.

In a white paper published by the Australian Treasury, the government commits to embracing tokenization, real-world assets (RWAs), and central bank digital currencies (CBDCs) as part of a broader reform to modernize its financial systems.

While the government does not plan to implement a retail CBDC currently, it envisions a wholesale CBDC and tokenized settlement frameworks as crucial for enhancing market efficiency and improving access to assets. Furthermore, the Australian Treasury, the Australian Securities and Investment Commission, and the Reserve Bank of Australia aim to conduct pilot trials involving tokenized money like stablecoins to facilitate transactions in wholesale tokenized environments.

“Markets for tokenized assets may be able to increase automation, reduce settlement risk, lessen reliance on multiple financial intermediaries, simplify trading processes, reduce transaction costs, and provide broader access to traditionally illiquid assets,” the report states.

The white paper also outlines a licensing structure for crypto exchanges that will be termed Digital Asset Platforms (DAPs) in Australia. Operators of DAPs will be required to meet specific financial services obligations, including maintaining sufficient capital and adhering to disclosure requirements while utilizing third-party custodians for customer assets.

Additionally, the government is addressing industry concerns regarding de-banking through its DAP licensing framework, aiming to facilitate better engagement of banking partners in risk management.

This initiative follows ongoing discussions in the U.S. about de-banking, where Senator Tim Scott’s FIRM Act proposes to prevent regulators from excluding crypto firms from banking access based on perceived reputational risks.