Australia’s Securities and Investments Commission has opened a consultation that could force significant structural changes on cryptocurrency exchanges operating in the country. The regulator published Consultation Paper 392 on October 15, setting out proposed standards for trading conduct, custody and financial resources ahead of a new licensing regime.
Under proposal C3.3, order-matching digital asset platforms would generally be prohibited from trading as principal on their own platforms or on platforms operated by related companies. Related entities would also face restrictions. The measure targets conflicts of interest that have attracted global scrutiny since the collapse of FTX in 2022. ASIC is not banning all principal trading: proposal C3.4 would preserve disclosed brokerage and principal-trading arrangements, including tied brokers, tied dealers, agents and platforms acting as principal counterparties with customer consent.
The consultation also targets commercial arrangements that could influence token treatment. Platforms would be barred from accepting benefits to favour particular digital tokens in admission, trading or marketing. Exchanges would need to monitor third-party market makers, publicly identify liquidity support providers and publish specified pre-trade information in real time without charge.
ASIC is weighing three alternative net tangible asset models. The most demanding requires operators without qualifying third-party custody arrangements to hold at least A$14 million, or 10% of average revenue, whichever is greater. A second model lowers the base to A$7 million for operators holding only non-financial-product assets. A third model combines a lower A$2 million base with activity-based additions of A$500,000 to A$1 million, subject to asset and revenue tests. Qualifying operators using approved third-party custody may face lower thresholds starting at A$200,000.
Custody proposals go beyond wallet security. ASIC is considering requirements for asset segregation, reconciliation, oversight of external custodians and quarterly reporting of wallet structures and addresses. The regulator has said it is not seeking private keys or seed phrases, but accurate records and enforceable customer rights would remain essential, especially for pooled wallets and offshore custody providers.
The Corporations Amendment (Digital Assets Framework) Act 2026 is scheduled to commence on April 8, 2027. Existing operators would have until October 7, 2027 to submit a licence application or variation. Industry estimates suggest around 400 crypto platforms operate in Australia, with about 10% holding an Australian Financial Services Licence. DECA chief executive Amy-Rose Goodey welcomed the shift toward practical implementation and said the three capital models would be examined closely for proportionality. OKX Australia chief executive Shane Chandra said the rules could drive industry consolidation. ASIC expects to publish final standards and guidance in March 2027.
