ASIC invites industry input on cryptocurrency exchange regulations before 2027 implementation
The regulatory consultation comes after lawmakers approved digital asset legislation in April, with the nation's securities watchdog now putting forward capital, custody and trading standards for cryptocurrency platforms.
The Australian Securities and Investments Commission launched a public consultation on Thursday regarding proposed capital, custody and trading standards for cryptocurrency platforms, as preparations continue for implementing legislation that lawmakers approved in April to expand regulatory oversight of the sector.
The regulatory proposals feature three different capital requirement models, limitations on platforms conducting proprietary trading, and mandates for quarterly disclosure of wallets containing client assets. The regulator is also proposing to permit foreign custody arrangements while requesting stakeholder input on protective measures in scenarios where an international parent entity or affiliated company becomes insolvent.
Our proposed guidance and standards acknowledge the increasing role of digital assets and tokenization, including in traditional parts of the financial system,
ASIC Commissioner Alan Kirkland
The proposed regulatory guidance and standards are designed to provide cryptocurrency platform operators with enhanced clarity regarding the requirements they must fulfill to secure a license, protect client assets and satisfy financial obligations under the incoming regulatory framework. The public consultation comes on the heels of Parliament's approval of the Corporations Amendment (Digital Assets Framework) Act earlier in the year.
ASIC's release of CP 392 is an important milestone for Australia's digital asset industry. After years of engagement on regulatory reform, it's encouraging to see the focus shift towards practical implementation.
Amy-Rose Goodey, CEO of the Digital Economy Council of Australia
Shange Chandra, who serves as CEO of OKX Australia, expressed support for the proposals, noting they have the potential to accelerate industry consolidation.
These standards are appropriately onerous. They will reward operators who have already invested in compliance, capital and custody. They will challenge operators who have waited to make that investment.
Shange Chandra, OKX Australia CEO
Capital, custody and trading rules in focus
The securities regulator is evaluating three different capital requirement models, with one option mandating that operators lacking qualifying third-party custody arrangements maintain a minimum of 14 million Australian dollars ($9.7 million) in net tangible assets or 10% of average revenue, selecting whichever amount proves greater.
We'll be working closely with our members to examine the three proposed capital models in considerable detail, particularly their proportionality across businesses of different sizes and the concessions available for third-party custody,
Amy-Rose Goodey
From our perspective, it is not at all contentious that this level of resourcing and care should be taken when clients entrust you with their assets,
Shange Chandra
The watchdog has put forward a proposal to permit offshore custody arrangements, while simultaneously requesting stakeholder feedback on whether domestic Australian operators should maintain emergency access to private keys in situations where the international parent company or custodian experiences failure.
The proposal not to mandate domestic custody is also significant, recognizing the global nature of digital asset markets,
Amy-Rose Goodey
The regulator has additionally proposed limitations on platforms engaging in proprietary trading activities and receiving incentives to prioritize specific tokens, measures aimed at addressing potential conflicts of interest.
The proposed restrictions on principal trading, affiliated liquidity arrangements and best execution requirements will also warrant careful consideration, given their implications for how Australian exchanges operate and access liquidity,
Amy-Rose Goodey
Chandra additionally advocated for an expedited licensing procedure for established companies that can demonstrate a proven history of regulatory compliance.
The public consultation represents a component of the regulator's 18-month implementation timeline, which was made public following the passage of the Digital Assets Framework Act in April.
Stakeholder responses are required by Nov. 27, with the regulator targeting March 2027 for publication of the final standards and guidance documents. The legislation is scheduled to become effective on April 8, 2027, and platform operators will have until Oct. 7, 2027, to submit applications for the required license and may continue operations while the regulator reviews their submissions.