Australia Proposes Crypto Custody Bill With Tough Penalties for Breaches

Australia is going to enter a new era of digital asset regulation through the introduction of the Corporations Amendment Bill. This will serve as a landmark legislation, and it has passed its first reading in the House of Representatives on November 26, 2025.

This legislation aims to bring crypto custody services under the country’s established financial services law. The main part of the bill is that it creates a mandate for digital asset platform operators and custodial services to obtain an Australian Financial Services License(AFSL). This will subject these companies to a robust set of regulations and oversight by the Australian Securities and Investments Commission(ASIC).

It is no wonder that Australia has taken on a regulatory approach to crypto amidst the recent crypto market collapses. Australia intends to close regulatory gaps and instill customer confidence and thereby secure market integrity. This is indeed a praiseworthy action from the Australian government.

Implications Of The Bill

This new bill is focused on businesses that hold or manage digital assets on behalf of clients. Under the Corporations Act of 2001, these activities are now defined with two new categories: Digital Assets Platforms(DAP) and Tokenized Custody Platforms(TCP).

DAPs are those platforms that possess digital tokens on trust for clients. This would include most of the cryptocurrency exchanges and digital asset custodians. On the other hand, TCPs are for platforms that issue tokens backed by real-world assets, such as Gold or property.

The legislation aims to protect customers from fraud and scams by forcing these companies to operate with safeguards under the financial law. This addresses a key area of vulnerability exposed by market failures.

The bill implies that operators now have to obtain and maintain an AFSL. This shifts regulatory oversight from the Australian Transaction Reports and Analysis Center(AUSTRAC), which usually deals with anti-money laundering(AML) and counter-terrorism financing(CTF), to ASIC.

As this bill comes into practice, ASIC will have control over the DAP and TCP companies. It will monitor and put regulatory safeguards on these companies to protect broader consumer interest so that the market never runs out of liquidity, courtesy of singular instances of fraud or scam.

Capital adequacy, risk management, and client asset segregation are all important aspects that the crypto companies will now have to follow thoroughly, as they were implemented for other financial institutions within the country.

Outlined in the bill is a clear set of tailored conduct requirements. These requirements force these companies to maintain clear operational rules regarding onboarding, transaction settlement, and disclosure obligations. Under this bill’s enforcement, companies will have to provide clients with a DAP/TCP guide, which will include details of the services provided, fees levied, and risks involved.

The Law Can Penalize Companies For Non-Compliance

Failure to comply with these new rules will lead to heavy penalties that will be levied on the companies that break the rules or miss any important aspect mentioned within the bill, which will later become the law. Operators who are found to be in breach of these terms could be fined up to 16.5 million Australian dollars, three times the benefit obtained from the breach, or 10% of the annual turnover, whichever is the bigger value.

These extreme laws and penalties are aimed at stopping any financial misconduct and irresponsible behavior in the digital asset space.

A Bill With A Special Focus

While the new bill sounds very complicated and stringent, the bill has in place certain policies that selectively provide targeted exemptions for small-scale ventures in the digital asset space. This is put in place so as not to burden them with the complications of the new bill.

This move was praised by several industry players as a platform whose volume is less than 10 million Australian dollars annually, and the value of assets held for any single client that does not exceed A$5000 will be exempt from needing a full AFSL.

This tiered approach reflects a balanced perspective and the work and effort put into the bill to secure Australia’s digital asset ecosystem. This provides room for smaller initiatives to innovate while significant market participants adhere to robust regulatory standards.

Conclusion

As the bill progresses through parliament, industry stakeholders will be watching closely for how it shapes the future of crypto in Australia. The new framework marks a significant step toward integrating digital assets into traditional finance. This provides much-needed clarity for businesses and security for consumers.

The heavy penalties underscore the seriousness of the matter that the government has taken an initiative in, and it cleans up the digital market environment of Australia for the days to come.

Also Read: Tether Halts $500M Uruguay Crypto Mining Project Over Energy Disputes