Crypto laws may shift after the May 17 election, impacting industry policies.
The Australian government, under its ruling center-left Labor Party, has outlined a plan to regulate cryptocurrency exchanges under existing financial services laws while addressing concerns about debanking. The proposed framework, announced by the Treasury on March 21, aims to bring digital asset platforms under stricter compliance measures to ensure consumer protection and industry stability.
The proposed regulations require Australian Financial Services Licences for crypto exchanges together with custody services and particular brokerage firms operating with digital assets. To operate they must follow strict rules for protecting customer funds while maintaining minimum capital thresholds. The framework will impose similar compliance obligations as those in place for traditional financial services.
The Treasury emphasized that the reforms would not apply to all digital asset activities. Small-scale crypto platforms that do not meet specific size thresholds will be exempt. Additionally, blockchain software developers and firms creating non-financial digital assets will not fall under the new rules.
Stablecoins will be regulated as stored-value facilities under the government’s Payments Licensing Reforms. However, certain stablecoins and wrapped tokens will be excluded from these regulations. The Treasury clarified that trading or secondary market transactions involving these assets will not automatically classify a platform as a financial market operator.
As part of the regulatory push, Prime Minister Anthony Albanese’s administration has pledged to collaborate with Australia’s four largest banks to better understand the challenges surrounding debanking. This approach, in which financial institutions limit or terminate services for companies involved in cryptocurrency, has been a persistent concern in the sector.
The government’s pledge involves assessing the scope and characteristics of debanking to create policies that promote a more inclusive financial system. Moreover, there are arrangements for an Enhanced Regulatory Sandbox in 2025, enabling companies to trial new financial products without requiring a complete license. An evaluation will also be conducted on the practicality of a central bank digital currency.
Crypto regulations will potentially shift their direction based on the outcome of the upcoming election scheduled to take place before May 17. Survey data indicates that Peter Dutton’s Coalition challenges Albanese’s Labor government control as the next major governing party of Australia. The Coalition government plans to direct its resources toward cryptocurrency regulation if it wins election power.
Industry leaders maintain a careful optimistic approach toward this proposed regulatory framework. BTC Markets CEO Caroline Bowler saw value in the reform while keeping emphasis on knowing more specifics about capital adequacy and custody regulations. Jonathon Miller at Kraken Australia stated the industry needs explicit and precise legal frameworks to tear down barriers that prevent its growth because proper regulation could increase transparency.
A draft of this legislation will be released to stakeholders for their review before 2025 when it will become part of the enacted laws. This proposed framework serves both protection of consumer rights and market innovation yet it maintains Australian competitiveness amid global cryptocurrency change.
