Australia Targets Safer Crypto Custody With Sweeping New Regulations

The Australian Government introduced the Corporations Amendment (Digital Assets Framework) Bill 2025, a proposal for a bespoke licensing and conduct regime for platforms holding digital assets on behalf of consumers.

According to the federal government's media release, the Bill is built around a clear objective: unlock innovation while safeguarding consumers. The proposal establishes formal legal definitions for two distinct types of financial products, digital asset platforms and tokenized custody platforms, and brings them under an expanded version of Australia's existing financial-services framework. This places the platforms in a familiar regulatory environment, updating the rules so that they reflect the technological realities of digital-asset markets.

The government says that millions of Australians engage in digital assets each year, from simple crypto purchases to accessing financial services underpinned by tokenized assets. The Bill is positioned as a response to that increasing use, ensuring that as participation grows, it does so within an environment that supports transparency, consumer safety, and market integrity. In its press release, the government directly connects this reform with broader ambitions of building trust in emerging financial technology and supporting new, more efficient ways of storing, moving and managing value.

Central to the proposal is a requirement for operators of customer assets to hold an Australian financial-services license and comply with conduct requirements that mirror Australia's decades-old consumer-protection regulations: to act efficiently, honestly, and fairly; to provide clear and publicly accessible disclosures; to handle assets with responsibility; and to maintain systems that mitigate operation and custody-related risks. The approach places great responsibility on custodial providers for the same level of care expected of traditional financial institutions handling client funds.

The framework also sets out expectations for how real-world assets can be digitally represented as tokens. Under the government's proposal, platforms that issue digital tokens backed by physical or financial assets will have to ensure that rights of token holders are preserved and the underlying asset is managed correctly. This is a significant step for Australia in recognizing tokenized assets in formal legislation, with the growing interest in pulling real-world instruments into digital formats to drive better efficiency, access, and settlement times.

According to the announcement, exemptions for smaller and low-risk operators will be provided by the Bill, considering that not every business within the sector causes the same level of systemic concern. The stated tiered structure is there in support of innovation, by way of lessening the burden on very small platforms while ensuring larger operators, holding substantial consumer assets, are subject to stronger controls. The government says this approach offers flexibility without compromising the overarching aim of consistent consumer protection.

The reforms come against the backdrop of global momentum toward clearer rules for digital-asset markets. Many jurisdictions are rethinking how tokenized assets should be treated under financial-services law, and Australia's proposal aligns with a broader international shift toward acknowledging that digital-asset custodians function similarly to established financial intermediaries. While the government's media release focuses on Australia's domestic framework, this international context underlines why such reforms are seen as necessary for competitiveness, investor confidence, and long-term economic growth.

The government also points to the potential of digital-asset infrastructure delivering productivity benefits across industries. By embedding digital assets into a regulated environment, policymakers estimate innovations in areas such as payments, asset management, and tokenized real-world assets could unlock billions in economic value over time. This reflects a broader expectation that digital finance will reduce costs, speed processes, and open new forms of market participation. While the view of the government is at a high level, it reinforces a belief that a clear regulatory regime can catalyze investment and development in the sector.

While the official announcement outlines the structure of the Bill, details surrounding implementation will become clearer as industry consultation proceeds. Timelines for the transition into a fully regulated environment often include timescales for licensing, compliance upgrades, and operational adjustments, particularly in respect of business not currently falling within financial-services regulation. The government’s release emphasizes its ongoing dialogue with industry participants; further opportunities to refine requirements and address practical considerations as the legislation moves through Parliament are likely.

Introduction of the Bill also has ramifications for consumer confidence. Global market disruptions in recent years have demonstrated the risks from platforms that hold significant volumes of customer assets without putting appropriate protections in place. In a bid to avoid vulnerabilities that would expose consumers to losses caused by mismanagement, operational failures, or poor governance, Australia is trying to make custodial platforms meet established conduct standards. This, the government says, is about ensuring that digital-asset services operate with the same expectations of accountability as traditional finance.

The Bill's focus on clarity of rights and obligations is timely, especially in a context where traditional finance is increasingly intersecting with digital-asset infrastructure. Banks, fintech companies, institutional investors, and technology developers have all indicated interest in tokenization and the provision of digital-asset services. A clarified regulatory regime simplifies how these parties interact and may further incentivize larger, regulated entities that need to have certainty before entering newer markets.

This legislative package represents a defining moment in Australia's approach to digital assets as the country positions itself for the next phase of fintech development. The government herein wants to establish a platform that not only facilitates growth but also protects consumers by mixing regulatory safeguards with room for innovation-a balance sought actively by many jurisdictions. The Bill now moves through the legislative process, with its final form setting how digital-asset businesses will operate in Australia for many years into the future.

Australia's proposed framework reflects the broader recognition that digital assets are increasingly a mainstream component of the financial system. The government's intention, as outlined in its media release, is to ensure this evolution takes place within a regulated framework that encourages responsible development. As the sector continues to mature, clear rules may become one of the most powerful tools for building trusted digital-asset markets and enabling long-term economic value.