With intensifying interest and developments in the global crypto industry, regulators are ramping up efforts to create clearer frameworks to strike a balance between innovation and consumer protection. Below we outline some of the key regulatory developments on the horizon to watch for that will further shape the Australian crypto industry in the coming months.
Regulatory Horizon
- AML/CTF Reforms: In November 2024, the Australian Parliament passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024 (Cth) bringing major reforms to Australia’s AML/CTF regime. These reforms have a significant impact on Australian virtual asset service providers from a compliance perspective. Read our separate article analysing these changes: AML/CTF Redefined: Crypto under Australia’s New Regulatory Framework.
Most changes impacting the crypto industry will commence on 31 March 2026. AUSTRAC is also currently consulting on the draft AML/CTF Rules with final AML/CTF Rules expected to be published later in 2025.
- Digital Asset Platform Reforms: In late 2023, the Government consulted on leveraging the Australian Financial Services Licence (AFSL) framework to regulate digital asset platforms to address risks associated with the service of holding digital assets for consumers. Legislative clarity for the digital assets industry is overdue and exposure draft legislation may be on the horizon.
- Payments System Modernisation: In early 2024, the Government consulted on proposed reforms to the regulation of the Australian payments service providers which would mean more products and activities will be regulated under the AFSL regime. These could include crypto based payment arrangements such as payment stablecoin arrangements. The last of the two rounds of consultation on these reforms closed in February 2024. There remains uncertainty about whether exposure draft legislation on the core licensing framework, including the associated obligations, will be released as expected within the next 12 months.
- Reforms to the Payment Systems (Regulation) Act 1998 (PSRA): The Government proposes to expand the scope of the PSRA by updating the current definitions of ‘payments system’ and ‘participant’ to pave the way for clearer regulations for payment system participants. Importantly, under the proposed amended legislation, the concept of ‘funds’ will include ‘digital units of value, including digital currency’. The proposed reform also gives power to the Minister to take certain actions in the ‘national interest’. The amending bill is currently before the Senate. Once passed, the amendments will take effect after six months’ time.
- Crypto Reporting Framework: The Government has recently completed its consultation on implementing the Crypto Asset Reporting Framework (CARF) developed by the OECD. The CARF establishes a framework for tax authorities to collect tax-related information on crypto asset transactions and share the information with other tax authorities. Australia is among a group of international jurisdictions indicating intent to implement the CARF to enable the reporting and exchange of information by 2027.
- Updates to ASIC’s Regulatory Guidance: ASIC is consulting on updating its Information Sheet 225 containing ASIC’s guidance on how the current financial services framework applies to crypto assets. This consultation closes on 28 February 2025. ASIC is expected to publish the updated Information Sheet 225 shortly after.
This follows ASIC’s release of the updated version of the Regulatory Guide 133, Funds Management and Custodial Services: Holding Assets (RG133) in December 2024 which sets out the minimum standards asset holders must meet to comply with their obligations under an AFSL. The updated RG133 expressly extends these standards to include the custody of crypto-assets (including custody by responsible entities and custodians).
Emerging Trends in Digital Asset Adoption
As digital assets continue to gain relevance, there are some key emerging trends and products—such as tokenisation of assets, crypto exchange-traded funds (ETFs) and crypto-backed loans. Some of these trends highlight the transformative potential of the blockchain technologies in the context of finance while raising complex regulatory, operational, and strategic considerations. Regulatory developments on our watchlist above will enhance clarity and consumer protection to the use of emerging digital asset product and considerably accelerate digital asset adoption.
- Tokenisation of Assets: Tokenisation refers to the process of converting real-world assets into digital tokens on a blockchain. From real estate to equities, tokenisation enables fractional ownership, broadening access to traditionally illiquid or high-value assets. As this trend gains momentum, stakeholders must address operational and legal challenges, including establishing trust in blockchain technology and ensuring compliance with asset-specific regulations.
- Crypto ETFs: The rise of ETFs offers retail investors access to digital asset markets by providing exposure to one or more cryptocurrencies through the traditional financial markets. The admission of ETFs to the ASX is regulated by ASIC. ASIC’s ETF Admission Guidelines cover ETFs with crypto assets (such as Bitcoin or Ethereum) as underlying assets for the ETF.
- Crypto-Backed Loans: This reference is typically to a loan that uses cryptocurrency as security. The investor borrows in fiat currency or a cryptocurrency and the borrower retains ownership of their cryptocurrency while using it to secure the loan.
This article was written by Mizu Ardra, Partner and Chenjie Ma, Senior Associate.
