Australia Crypto Licensing Bill Advances After Senate Backing

Australia’s Senate Economics Legislation Committee backed a crypto licensing bill on March 16. The australia crypto licensing framework would push exchanges and tokenization platforms into the country’s existing financial services regime.

One step closer to mandatory oversight.

The Corporations Amendment (Digital Assets Framework) Bill 2025 now heads to the full Senate for debate. If passed, centralized exchanges and custody platforms holding client assets must comply with Australian Financial Services Licence requirements. No more regulatory gaps.

This follows FTX and other high-profile collapses that left Australian customers burned.

## What the Bill Does

The legislation treats “digital asset platforms” (DAPs) and “tokenised custody platforms” (TCPs) as financial products under the Corporations Act. That brings them under Australian Securities and Investments Commission oversight.

Licensed platforms must meet ASIC-set custody standards. Settlement protocols. Disclosure rules for retail clients. Platform-specific conduct and governance requirements.

Assistant Treasurer Daniel Mulino introduced the bill last November. The goal: close oversight gaps exposed when crypto platforms imploded and customer funds vanished.

Small operators get a carve-out. Annual transaction volumes under 10 million Australian dollars ($7 million) stay exempt. Public blockchain infrastructure also sidesteps the regime.

## Industry Pushback on Definitions

Law firm Piper Alderman warned the committee about scope creep. The bill’s “digital token” and “factual control” tests cast too wide a net, the firm argued. Wallet software providers could get caught. Infrastructure operators in multi-party computation setups might face unintended classification.

Ripple Labs echoed the concern. The US blockchain firm backed “control” as the right regulatory trigger but said the australia crypto licensing bill needed sharper definitions for modern security architectures.

MPC wallets split custody across multiple key shards. No single entity holds unilateral control. But Ripple warned that a strict reading of “factual control” could misclassify tech providers holding one shard as regulated custodians.

The fix Ripple proposed: clarify that factual control requires unilateral transfer ability without client cooperation. Holding a key shard shouldn’t equal custody.

The committee acknowledged these points. Then sided with Treasury anyway.

Treasury’s plan: refine the regulatory perimeter through future regulations rather than rewriting core definitions now. That punts the hard work down the road.

## Coinbase Backs Bill, Slams Debanking

Coinbase Australia director John O’Loghlen called the recommendation “an important step for Australia’s standing in the global digital economy.” He told Cointelegraph that Australia has the capital and talent to lead in digital assets but needs clear rules to unlock that potential.

Then he pivoted to banking access.

“The anti-competitive practice of debanking is rampant despite the government endorsing measures to address it back in 2022,” O’Loghlen said. He urged Canberra to prioritize implementing the Council of Financial Regulators’ recommendations on banking access for crypto firms.

Debanking—when banks terminate accounts for crypto businesses without explanation—has throttled the sector despite government lip service about supporting innovation. O’Loghlen’s comment highlights the gap between policy and practice.

## What Happens Next

The bill moves to the Senate floor for debate. No vote date set yet.

If it passes, ASIC gets authority to set custody and settlement standards for platforms. That means rulebooks, compliance frameworks, and enforcement mechanisms all still to come.

The australia crypto licensing regime would rank among the more comprehensive frameworks globally. It mirrors moves by other jurisdictions—EU’s MiCA, Singapore’s Payment Services Act updates, Japan’s revised custody rules.

But the devil lives in ASIC’s implementation. Overly prescriptive custody rules could lock out smaller operators. Vague “factual control” definitions could pull non-custodial services into scope.

Ripple and Piper Alderman raised legitimate concerns about MPC wallets and infrastructure providers. Treasury chose to defer rather than define. That creates regulatory uncertainty for firms deploying cutting-edge security models.

I’ve seen this before. Regulators write broad statutes, promise to clarify later, then take years to issue guidance. Meanwhile, firms either over-comply (expensive) or risk being offside (dangerous).

## The Debanking Problem

O’Loghlen’s debanking comment matters more than it seems.

Australia can pass the tightest australia crypto licensing framework in the world. Won’t matter if licensed platforms can’t access banking rails. And right now, they can’t—at least not reliably.

The government acknowledged the problem in 2022. Council of Financial Regulators made recommendations. Nothing changed.

Banks still terminate crypto accounts with zero notice. Cite “risk appetite” or “strategic direction.” No appeals process. No transparency.

That’s not regulatory compliance. That’s anti-competitive gatekeeping.

The irony: this bill pulls crypto platforms into the regulated financial system, but the regulated financial system won’t bank them. Circular problem.

Data shows similar dynamics in other markets. In the UK, crypto firms with full FCA authorization still struggle for banking. In the US, Operation Chokepoint 2.0 squeezed access despite no formal debanking policy.

Australia risks the same outcome. Licensing without banking equals regulation without function.

## What This Means for Operators

Exchanges like Coinbase, local platforms like Independent Reserve, and tokenization ventures now face compliance costs. Legal teams. Custody audits. Disclosure frameworks. Governance overhauls.

Small platforms under the $7 million threshold dodge the bullet. For now. Thresholds have a way of dropping once regulators gain jurisdiction.

Non-custodial services—DEXs, wallet software, infrastructure—should be exempt. Should be. But the “factual control” language creates ambiguity. Until ASIC clarifies, some operators won’t know if they’re in or out.

Ripple’s concerns about MPC wallets apply to institutional custody providers using advanced security models. If every key shard holder counts as a custodian, multi-party setups become unworkable under Australian law.

That would be bad. MPC represents the cutting edge of custody security. Forcing firms back to single-key models or offshore incorporation defeats the purpose of forward-looking regulation.

## The Global Context

Australia isn’t alone. Every major jurisdiction is building crypto licensing regimes.

EU’s MiCA went live in phases starting 2023. Singapore updated its Payment Services Act. Hong Kong rolled out retail trading rules. Japan tightened custody requirements after Coincheck and Mt. Gox.

The pattern: exchange collapses → customer losses → regulatory crackdown → licensing mandates.

FTX accelerated timelines everywhere. Australia’s bill follows the script.

What separates good frameworks from bad: proportionality, clarity, and banking access.

Proportional rules don’t treat a $50 billion exchange like a $5 million startup. Clear definitions don’t leave MPC wallets in regulatory limbo. Banking access ensures licensed firms can actually operate.

Australia’s bill scores mixed marks. The $7 million exemption shows proportionality. The vague “factual control” test fails clarity. The unresolved debanking issue kills banking access.

Two out of three isn’t bad. But the banking piece matters most.

## Levels to Watch

Senate debate timing: unknown. Could be weeks, could be months.

ASIC rulemaking post-passage: 12-18 months minimum for detailed custody and settlement standards.

Debanking progress: the Council of Financial Regulators’ 2022 recommendations still sit unimplemented. No timeline for action.

Industry compliance costs: expect 15-25% overhead increases for mid-tier platforms once licensing kicks in.

The smart money already factored this in. Every major exchange knew licensing was coming after FTX. Coinbase, Kraken, Binance—all have compliance teams prepped.

Smaller operators face harder choices. Comply and absorb costs. Exit the Australian market. Or stay under the $7 million threshold and limit growth.

None of those options are great.

For now, the bill advances. The Senate will debate. Treasury will write regulations. ASIC will enforce.

And crypto platforms will keep asking banks for accounts they’ll never get.

Question is whether Canberra fixes the debanking problem before the licensing regime goes live. If not, Australia gets the regulatory framework without the functional ecosystem.

That’s compliance theater, not effective oversight.

Next catalyst: Senate floor debate.