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Australia's cryptocurrency sector has largely voiced support for the government's recently released draft legislation aimed at structuring the digital asset market. However, industry players have submitted feedback during a Treasury consultation, emphasizing the need for greater clarity on several critical aspects of the proposed rules.
Key Takeaways
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Industry generally supports the intent of the draft legislation to bring structure to the digital asset sector.
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Concerns remain regarding the lack of clarity on specific details, regulatory discretion, and operational aspects for crypto exchanges.
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Firms are seeking clear guidance on licensing, custody standards, and the ability for Australian platforms to access offshore liquidity.
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The timeline for final legislation is uncertain, with predictions ranging from early 2026 to the end of that year.
Industry Support and Lingering Questions
The draft legislation, which proposes extending existing finance sector laws to crypto exchanges, has been met with a generally positive reception. The proposed framework includes creating new financial product categories under the Corporations Act: "digital asset platform" and "tokenized custody platform." Both would necessitate an Australian Financial Services License and registration with the Australian Securities and Investments Commission (ASIC).
However, industry representatives have highlighted that the draft leaves "critical questions unanswered." While supporting the government's intent to provide structure, they stress that this structure must be accompanied by clarity. The Treasury's consultation period, which concluded recently, saw submissions from various crypto firms.
Concerns Over Regulatory Discretion and Operational Clarity
Crypto exchange Swyftx, in its submission, called for the draft law to be simplified and clarified, particularly concerning the broad powers granted to the government and the operational flexibility for exchanges. The company noted that the draft allows for a "high degree of discretion" by the Treasury and enables regulators to "impose fundamental changes." Swyftx advocates for a clear statement to guide future regulatory interpretation and to delineate the powers of the Treasury and ASIC in designating platforms and setting standards.
Mandy Jiang from CloudTech Group acknowledged the draft laws as a "significant step forward" but pointed out that many "critical details," such as licensing and custody standards, are delegated to ASIC for future guidance. The effectiveness of the legislation in fostering innovation and growth, she stated, will depend heavily on the "timeliness and quality of ASIC’s forthcoming guidance."
Gaps in Liquidity and Advisory Services
Further concerns raised by Swyftx include the lack of clarity on how Australian crypto platforms can legally source liquidity from offshore exchanges, which is deemed essential for competing on a "level playing field with international markets." Additionally, the draft laws do not appear to permit licensed financial advisers to offer advice on cryptocurrencies directly, restricting them to advising only on regulated platforms that offer crypto services.
Caroline Bowler, former CEO of BTC Markets, identified a contradiction in the legislation regarding how to determine if a cryptocurrency is not a financial product, yet a platform trading it could be treated as a financial market. She also questioned the introduction of multiple licenses without clear articulation of consumer benefits or specific risks addressed, warning against a regime that could be "burdensome for businesses but does not necessarily enhance consumer protection."
Anticipated Timeline for Legislation
The timeline for the finalization and introduction of the bill remains uncertain. Some industry figures, like Vakul Talwar from Crypto.com, are pushing for swift action, predicting a potential introduction as early as March and finalization by the end of 2026. Others, such as Edward Carroll from MHC Digital Group, anticipate legislation might not be introduced before the end of 2026, citing the significant work required to translate consultation feedback into a workable bill. The consensus is that formalizing the rules sooner will allow businesses to plan with greater confidence.
Sources
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Australian crypto firms back draft laws, but ‘critical questions’ remain — TradingView News, TradingView.
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