Australia Passes Landmark Digital Assets Law, Bringing Crypto Platforms Under Financial Services Regulation

SYDNEY, April 7, 2026 — Australia has enacted its first comprehensive digital assets legislation, introducing a licensing framework for cryptocurrency exchanges, custodians and other digital asset service providers in a move that fundamentally reshapes the country's regulatory landscape for crypto markets.

The Corporations Amendment (Digital Assets Framework) Bill 2025 passed Parliament on April 1 and will require digital asset platforms operating in Australia to obtain an Australian Financial Services Licence (AFSL), extending financial services regulation to a sector that has largely operated outside the traditional regulatory perimeter.

The legislation is widely regarded as one of the most significant reforms to Australia's financial services framework in recent years, providing legal clarity for cryptocurrency businesses while strengthening consumer protections for a rapidly growing investor base.

Bringing Crypto Into the Regulatory Mainstream

The new law amends the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001, integrating digital asset businesses into Australia's existing financial services regime.

Under the framework, cryptocurrency exchanges, custodians and certain wallet providers will face licensing, disclosure, conduct and asset-holding obligations similar to those imposed on traditional financial institutions.

Industry experts say the legislation reflects a broader recognition that digital assets have evolved beyond a niche technology and now perform many of the same economic functions as conventional financial products.

"The regime is firmly positioned within the AFSL framework, which means investors and participants will benefit from protections Australians already understand and trust," said Steven Pettigrove, a financial services and fintech partner at Piper Alderman. Businesses will have an 18-month transition period to comply with the new licensing and operational requirements.

New Categories of Financial Products

A central feature of the legislation is the introduction of two new regulated financial product categories: Digital Asset Platforms (DAPs) and Tokenised Custody Platforms (TCPs).

Digital Asset Platforms broadly cover businesses that hold digital tokens on behalf of customers and maintain records of customer interests, including cryptocurrency exchanges, brokers, custodians and some wallet providers.

Tokenised Custody Platforms apply to operators that create digital representations of underlying assets while retaining custody of those assets on behalf of token holders. Regulators argue that the framework extends long-standing principles of financial regulation into the digital asset sector without requiring an entirely new legal architecture.

Dr Rhys Bollen, Senior Executive Leader for FinTech, noted that the legislation reflects a government decision that digital assets can largely be accommodated within existing legal concepts while introducing targeted adjustments where necessary.

Industry Divided Over Regulatory Approach

While many industry participants welcomed the introduction of regulatory certainty, some questioned whether applying traditional financial services laws to digital assets adequately reflects the unique characteristics of blockchain technology. 

Michael Bacina, co-founder of NXT Law and a specialist in financial technology regulation, described the framework as an elegant solution that places digital asset businesses on a level playing field with traditional financial institutions.

However, he argued that digital assets represent a fundamentally different technological paradigm. "Digital assets change the game in much the same way email transformed communication," Bacina said. “Forcing them into traditional regulatory structures may protect incumbents while limiting some of the benefits of decentralisation.” He pointed to the United States, where regulators have increasingly distinguished between traditional securities and many cryptocurrency tokens, as an alternative regulatory model.

Questions also remain about how broadly the legislation could be applied to software developers, decentralised finance (DeFi) projects and infrastructure providers that support blockchain networks without directly controlling customer assets.

Consumer Protection and Market Confidence

The legislation arrives amid growing cryptocurrency adoption across Australia. According to the 2026 Independent Reserve Cryptocurrency Index, approximately one-third of Australians now own cryptocurrency, the highest level recorded since the survey began. Bitcoin remains the most widely held digital asset, owned by 71 percent of cryptocurrency investors. The survey also found strong support for regulation, with 62 percent of cryptocurrency investors indicating that licensed exchanges would increase their confidence in the sector.

Trust remains a critical issue for broader adoption. Separate research commissioned by cryptocurrency exchange Swyftx found that concerns about regulation, fraud and consumer protection remain among the primary reasons many Australians have yet to invest in digital assets. Regulators believe the new framework will help address those concerns by establishing clear licensing standards and oversight mechanisms. ASIC's existing guidance already requires many digital asset businesses to assess whether their products fall within the scope of financial services law. The new legislation provides a more explicit regulatory framework and clearer compliance obligations.

Custody Rules Viewed as Key Reform

Among industry stakeholders, the proposed custody requirements have attracted broad support. Digital asset custody has emerged as one of the most significant risk areas within the cryptocurrency industry following a series of high-profile exchange collapses and security breaches globally.

Bacina described the custody provisions as one of the strongest aspects of the legislation, arguing that robust safeguards for customer assets are essential for market integrity.

"The requirements around digital asset custody are extremely sensible," he said. "If nothing else was regulated, custody moves the needle."

However, he cautioned that excessive compliance costs related to licensing, insurance and capital requirements could reduce competition and drive smaller operators out of the market.

"If too many operators are pushed out with onerous costs, Australians may ultimately face reduced choice and be pushed toward unregulated offshore providers," he warned.

Positioning Australia in the Global Digital Economy

The legislation comes as major jurisdictions worldwide race to establish regulatory frameworks for digital assets. Governments across Europe, Asia and North America are introducing new rules aimed at balancing innovation with investor protection, creating increasing competition to attract digital asset businesses and investment. Australia's technology sector has argued that a well-regulated digital asset industry could deliver significant economic benefits. Previous estimates from the Tech Council of Australia suggested that a responsible digital asset sector could contribute up to $60 billion annually to Australia's economy by 2030 while reducing payment and transaction costs.

For consumers, businesses and institutional investors, supporters argue that the legislation delivers something the industry has long sought: certainty.

By creating a licensing framework for domestic operators, regulators hope Australians will be better able to distinguish between regulated local providers and unlicensed offshore platforms.

Industry observers say the success of the reforms will ultimately depend on how ASIC implements the framework and how future regulations address emerging sectors such as decentralised finance, tokenisation and blockchain infrastructure.

For now, Australia's Digital Assets Framework marks a significant milestone in the evolution of cryptocurrency regulation, signaling the country's intention to become a regulated but innovation-friendly participant in the global digital asset economy.

https://lsj.com.au/articles/crypto-bitcoin-stablecoin-regulated-under-first-australian-digital-assets-legislation/