Australia now requires licenses for exchanges, custody platforms

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The Australian government has presented new legislation that will regulate digital asset platforms and custodians, requiring them to hold an Australian Financial Services License (AFSL), thereby placing them on an equal footing with regulated financial services firms.

The proposal, dubbed the Corporations Amendment (Digital Assets Framework) Bill 2025, is intended to ‘unlock innovation and safeguard investment’, according to MP and Treasurer Dr. Jim Chalmers.

The Bill introduces definitions for two types of companies, both of which now must hold an AFSL to operate:

• ‘Digital asset platform’ – a facility under which an operator possesses digital tokens on behalf of clients, whether as trustee, bailee, or under contractual arrangements that require the operator to follow client instructions
• ‘Tokenized custody platform’ – a facility under which an operator identifies an underlying asset (other than money), creates a single digital token representing the right to redeem or direct its delivery, and holds the underlying asset on behalf of the token holder.

Companies required to have an AFSL are under a host of obligations, including:

• A requirement to act efficiently, honestly, and fairly;
• They must not engage in misleading and deceptive conduct, nor offer unfair contract terms
• Must inform customers as to the manner in which their assets are held
• Have avenues of dispute resolution and compensation

The licensing requirements are undoubtedly the biggest change introduced by the Bill. However, in its current form, the Bill provides for several exemptions. Platforms holding less than AUD5,000 (USD3276~) per customer and processing less than AUD10 million (USD6.5 million~) worth of transactions per year do not require an AFSL.

Additionally, companies offering non-custodial staking do not require an AFSL. This is defined in opposition to ‘custodial staking arrangements,’ which are: “a custodial staking arrangement, for a digital asset platform or a tokenized custody platform, is an arrangement that is entered into by both the operator of the platform and a beneficiary under the platform (whether directly or through a nominee), and is entered into through the facility that constitutes the platform.”

In announcing the Bill, Treasurer Dr. Chalmers MP quoted figures from the Digital Finance Cooperative Research Centre claiming that Australia could capture up to $24 billion a year in productivity gains and cost savings if it can unlock digital finance innovation.

If passed into law, firms will have an 18-month transition period to get compliant with the rules.

Read the Australian Treasury’s press release here. Read the full Bill here.

Watch: Regulation is on full throttle