Australia’s “New Digital Asset Rules” — The World’s First Comprehensive Crypto Custody and Trading Regulatory Framework Emerges

Background: Why Did Australia Introduce New Regulations?

Image source: https://www.coindesk.com/policy/2025/11/27/australia-s-new-digital-assets-bill-seeks-to-prevent-past-crypto-failures

In recent years, the cryptocurrency market has experienced dramatic swings. These have exposed substantial structural risks, including platform security flaws, opaque custody practices, and liquidity crises. Major incidents like FTX and Celsius caused significant asset losses for users and underscored systemic dangers resulting from insufficient regulation. To prevent recurrence, rebuild public trust, and foster deeper integration between the crypto sector and traditional finance, the Australian government has moved to establish a robust regulatory framework.

In November 2025, the Treasury and Department of Financial Services formally presented the Digital Asset Framework Bill to Parliament. This landmark legislation is Australia’s first comprehensive law tailored to companies holding digital assets on behalf of clients, marking a transition from broad regulatory principles to concrete, enforceable rules.

Key Provisions and Regulatory Structure of the Bill

The bill categorizes industry participants into two types of platforms, each subject to distinct regulatory requirements:

1. Digital Asset Platform
   Operators that provide crypto asset custody for clients and offer services such as trading, buying, selling, transferring, and staking.
2. Tokenized Custody Platform
   This category extends beyond traditional crypto assets to include tokenized custody of real-world assets like bonds, real estate, and commodities.

All platforms in these categories must obtain an Australian Financial Services License (AFSL) and comply with custody, settlement, and risk management standards set by the Australian Securities and Investments Commission (ASIC).

To encourage innovation, the bill provides exemptions for small-scale, low-risk platforms: if a single client’s assets are below $5,000 and annual platform transaction volume does not exceed $10 million, these platforms may qualify for temporary exemption from full licensing requirements. However, these exemptions do not mean an absence of oversight; platforms must still meet basic customer protection standards.

Additionally, the bill significantly raises the penalties for violations. Companies that breach custody standards or operate without a license face multimillion-dollar fines or penalties based on multiples of annual revenue, strengthening regulatory deterrence.

Impact on Platforms, Exchanges, and Users

Platforms and Exchanges: The industry is entering a new era of stringent compliance. Platforms must adhere to principles of efficiency, honesty, and fairness, implementing core requirements such as asset segregation, risk management, transparent disclosure, and secure settlement. Operators lacking a license or failing to meet custody standards will face major legal risks. These changes will raise governance standards across the market, improve custody practices, and boost operational transparency.

Users and Investors: Clear custody and trading standards deliver greater asset security. Users benefit from institutional protections for fund flows, trade execution, and custody risks. Regulatory changes lower barriers to entry for institutional investors and compliance-driven funds, which will encourage broader participation.

Market Structure: Regulation will accelerate industry segmentation. Compliant platforms will more easily attract financial institutions, funds, and professional investors. This will push the market toward higher governance standards and attract more institutional participants. Small and mid-sized platforms unable to comply may be forced out.

Lessons for the Global Crypto Market

As the world’s first nation to formally define a regulatory framework for crypto custody and trading platforms, Australia sets a powerful precedent. Most countries still restrict crypto oversight to anti-money laundering (AML), counter-terrorism financing (CTF), or tax reporting, with little institutional regulation of custody and trading. By legislating platform responsibilities, custody structures, and user protection standards, Australia provides a model for global regulators.

This move will spur other countries to develop structured regulatory systems, promote convergence between crypto assets and traditional capital markets, and offer clear institutional pathways for pension funds, family offices, and conservative funds. As a result, crypto assets will become more mainstream and markets will grow more stable.

Conclusion: Is the Era of Compliance Officially Underway?

The Digital Asset Framework Bill represents a pivotal milestone in Australia’s journey toward a mature crypto industry. From platform operations and user protection to custody standards and settlement processes, this framework shifts the sector from unchecked growth to the realm of financial infrastructure.

For businesses, it redefines competitive barriers. For users, it brings enhanced safety and transparency. For the global market, it may signal the start of a new wave of institutionalization.

The start of the compliance era depends on the bill’s formal passage and its real-world impact. Nonetheless, this marks a critical step in industry development and will continue to shape the future of global regulation.