Australia passes law requiring AFSL for crypto firms

TLDR

• Australia passed the Corporations Amendment Digital Assets Framework Bill 2025 through both houses of Parliament.
• The new law requires crypto exchanges and custody providers to obtain an Australian Financial Services Licence.
• The framework creates regulated categories for digital asset platforms and tokenized custody platforms.
• The Australian Securities and Investments Commission will oversee compliance and enforce operational standards.
• Licensed firms must safeguard client assets, maintain adequate capital, and provide clear disclosures.

Australia approved a comprehensive digital asset framework on April 1, bringing crypto platforms under core financial laws. Lawmakers passed the Corporations Amendment (Digital Assets Framework) Bill 2025 through both houses of Parliament. The measure requires exchanges and custody providers to obtain financial services licenses and follow existing regulatory standards.

Australia Integrates Crypto Platforms into AFSL Regime

Parliament passed the bill on April 1, and it now awaits royal assent. The law amends the Corporations Act and creates two regulated digital asset categories. Authorities will integrate crypto intermediaries into the Australian Financial Services Licence regime.

Digital asset platforms include exchanges that hold crypto assets for users. Tokenized custody platforms cover firms that hold real-world assets and issue digital tokens. Both categories must secure an AFSL from the Australian Securities and Investments Commission.

Operators must safeguard client assets and maintain adequate capital under the regime. They must also provide clear disclosures and join approved dispute resolution systems. ASIC will supervise compliance under the same standards applied to brokers and fund managers.

The framework targets intermediaries that control customer funds rather than the assets themselves. Policymakers shaped the approach to address commingling and misuse of funds. They also cited insolvency cases that left customers unable to recover holdings.

The reforms replace a fragmented system that required only anti-money laundering registration. Previously, exchanges needed full licenses only when products qualified as financial instruments. Now, platforms must meet operational and financial standards aligned with existing financial services laws.

Crypto Firms Face Licensing Rules and Limited Exemptions

The legislation grants ASIC expanded powers over custody, governance, and risk management standards. Regulators can issue civil penalties when firms breach the rules. Officials stated that the regime ensures consistent oversight across digital asset services.

Smaller platforms will receive limited exemptions under defined thresholds. Firms holding less than A$5,000 per customer avoid full licensing requirements. Companies processing under A$10 million in annual transactions also qualify for relief.

Lawmakers said the thresholds aim to preserve early-stage innovation. At the same time, authorities will monitor firms that exceed those limits. Once firms cross the caps, they must apply for and obtain an AFSL.

Industry participants must prepare during a transition period before enforcement begins. The government will outline compliance timelines after royal assent. Platforms must adjust governance systems and capital structures to meet the new standards.

Australia’s Hostplus pension fund is exploring digital asset offerings for its members. The fund plans to use its ChoicePlus platform to provide Bitcoin and other digital assets. A rollout could begin next financial year, pending regulatory approval and final product design.