Australia Unveils New Crypto Regulations, Pledges Action on Debanking

The Australian government, under Prime Minister Anthony Albanese, has outlined a new regulatory framework for digital assets, aiming to provide greater certainty for industry participants while addressing risks tied to consumer protection and market integrity. 

The reforms will require major crypto platforms to obtain an Australian Financial Services Licence while exempting smaller-scale firms and businesses not involved in financial services.

Treasury’s Statement on Developing an Innovative Australian Digital Asset Industry paper, released Thursday, details plans to regulate Digital Asset Platforms and payment stablecoins under existing financial services laws.

The move follows similar regulatory approaches in the European Union and Singapore, The Treasury Department wrote.

“By aligning with international best practices, Australia can boost the global competitiveness of our digital asset sector,” the paper reads.

It’s worth noting both the EU and Singapore have taken significant steps to regulate crypto, with the EU introducing MiCA as a bespoke regime, while Singapore extended its existing Payment Services Act to include crypto service providers under its licensing and compliance framework.

Before MiCA, the EU applied existing financial regulations like MiFID II for security tokens, the E-Money Directive for stablecoins, and AMLD5 for crypto exchanges, a phased approach similar to Australia’s strategy.

Regulatory scope and key Inclusions

The proposed framework will apply to crypto exchanges, custody services, and specific brokerage platforms that facilitate trading and storage of digital assets.

Businesses offering tokenized stored-value facilities, including some stablecoin issuers, will also be subject to licensing and compliance obligations.

However, firms creating or using digital assets for non-financial purposes, developing software, or maintaining digital asset infrastructure will not fall under the new regulations.

Government seeks to tackle debanking

The government also acknowledged debanking—where financial institutions restrict services to crypto firms—as a growing issue. 

The new licensing regime aims to improve risk management and transparency within the sector, which could reduce instances of debanking by major financial institutions.

“The government has been working with stakeholders to ensure transparency and fairness, including engaging with Australia’s major banks to understand the extent of debanking,” the paper reads.

Jonathon Miller, Kraken’s managing director of Australia, welcomed the initiative, emphasizing the need for bespoke legislation to reduce uncertainty.

“It’s great to see recognition of the urgent need for bespoke crypto legislation to address the existing confusion and uncertainty facing Australian crypto investors and businesses,” Miller told Decrypt. “By establishing a clear regulatory framework and mitigating problems like debanking, the government can remove the barriers hampering growth in the Australian economy.”

The government plans to release draft legislation for public consultation sometime this year.

The Australian Securities and Investments Commission is also expected to refine its guidance on digital assets with further updates to its Information Sheet 225.