Australia Proposes Strict Capital, Custody Rules for Crypto Platforms in Licensing Push

Australia’s corporate regulator unveiled draft standards Thursday that would require cryptocurrency platforms to hold up to 14 million Australian dollars ($9.7 million) in net tangible assets and submit to quarterly wallet audits, marking the most concrete step yet toward a mandatory licensing regime set to take effect in April 2027.

The Australian Securities and Investments Commission released Consultation Paper 392, detailing three alternative capital models, restrictions on proprietary trading, and a framework for offshore custody arrangements. The proposals flesh out the Corporations Amendment (Digital Assets Framework) Act, which passed Parliament in April after years of industry consultation.

“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 said.

The capital requirements represent a significant barrier to entry. Under the most stringent model, platforms without qualifying third-party custody arrangements must maintain the greater of A$14 million in net tangible assets or 10% of average annual revenue. Concessions are available for operators using approved custodians, though ASIC has not yet defined which custodians qualify.

“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,” said Shange Chandra, CEO of OKX Australia. He predicted the standards would drive consolidation, rewarding firms that invested early in compliance infrastructure.

The proposals also target conflicts of interest. ASIC would restrict platforms from trading on their own account, accepting payments to favor specific tokens, or entering affiliated liquidity arrangements without best-execution safeguards — practices common in crypto markets but prohibited in traditional securities venues.

On custody, the regulator signaled openness to offshore storage but asked whether Australian operators should retain emergency access to private keys if a foreign parent or custodian fails. The question reflects lessons from the 2022 collapse of FTX, where customer assets were commingled with an affiliated trading firm and became inaccessible during bankruptcy.

“The proposal not to mandate domestic custody is also significant, recognizing the global nature of digital asset markets,” said Amy-Rose Goodey, CEO of the Digital Economy Council of Australia, an industry body. She noted members would scrutinize the proportionality of capital rules across different business sizes.

Australia’s approach contrasts with the United States, where the SEC has pursued enforcement actions without issuing comprehensive rules, and the European Union, whose Markets in Crypto-Assets regulation took full effect in December 2024. Singapore requires licensing but has not imposed comparable capital floors.

The consultation runs until November 27. ASIC aims to publish final standards by March 2027. The law takes effect April 8, 2027, with a six-month transition window for license applications. Platforms may continue operating while applications are assessed.

Industry participants now face a compressed timeline to restructure balance sheets, negotiate custody agreements, and build compliance systems — or exit the Australian market.