Australia’s Labor-led government has introduced a new regulatory framework aimed at integrating crypto exchanges and related services within the existing financial service laws of the nation. The announcement was made by the Treasury Department on March 21, 2025, and is a pivotal move toward establishing oversight in the digital asset sector ahead of a closely approaching federal election anticipated by May 17, 2025.

Under the new guidelines, crypto exchanges, custodians, and selected brokerage firms handling digital assets must secure an Australian Financial Services Licence. They will also need to adhere to capital requirements and customer asset protection regulations, aligning their operations with those of conventional financial institutions.

Australia’s Crypto Framework Builds on Previous Consultations

The development of this initiative dates back to consultations initiated by the government in August 2022, aimed at creating a more tailored regulatory framework for digital assets.

However, this proposed framework has exemptions; smaller entities that do not meet specific size thresholds, as well as blockchain developers and token creators whose offerings are not classified as financial products, will not be subjected to these requirements.

Additionally, the framework addresses stablecoins, indicating that those utilized for payments will be categorized under government’s Payments Licensing Reforms as stored-value facilities, while others—including some stablecoins and wrapped tokens—will have different regulatory implications.

In a commitment to resolving issues in the sector, Prime Minister Anthony Albanese also announced a partnership with Australia’s four major banks to investigate the patterns and repercussions of debanking, the phenomenon wherein crypto-focused companies face withdrawal of banking services. The government is also set to launch an Enhanced Regulatory Sandbox in 2025, permitting startups to test new financial products without opting for full licensing, along with a review of a central bank digital currency (CBDC).

Amid these developments, the Labor government intends to engage the public regarding the draft legislation, yet the impending federal election may influence these priorities. Opposition leader Peter Dutton has committed to prioritizing crypto regulation should his party come into power, as indicated by a recent YouGov poll showcasing a competitive race between the leading parties.

Key Takeaways

• Australia has proposed a regulatory framework mandating crypto exchanges and custodians obtain financial service licenses.
• The framework exempts smaller platforms and non-financial blockchain developers from certain regulations.
• The Labor government also aims to address debanking issues and introduce a regulatory sandbox in 2025.