Australian government outlines 'fit for purpose' digital asset framework plans to become a 'global industry leader'

The Australian government's Treasury department has outlined plans to develop a 'fit for purpose' digital asset regime to help build a more dynamic and competitive economy that balances innovation with consumer protection. 

In a paper released by the country's Treasury department on Thursday, the government, led by Prime Minister Anthony Albanese, said it is working with industry, regulators and the broader community in a new approach designed to "make Australia a leader in the global digital asset ecosystem."

"Digital assets are a rapidly evolving part of the economy, offering opportunities for new products and productivity gains," the paper states. "The potential benefits of these assets are far reaching, from streamlining payments systems to transforming how we invest and do business."

The government's primary reform plans include establishing a framework for digital asset platforms (DAPs) and stablecoins and launching a suite of initiatives to "investigate ways to safely unlock the potential benefits of digital asset technology," informed by a prior public consultation .

Australia's new approach

The framework will focus on DAP operators, including crypto exchanges, custody products and some brokerage arrangements, without adding new regulatory burdens on software developers, small-scale startup platforms or businesses using digital assets for non-financial purposes, the Treasury said.

It will also cover payments service provider reforms to include stablecoin and other tokenized real-world asset issuers under the Australian Financial Services Licence (AFSL), requiring businesses providing these services to comply with certain existing financial services obligations. 

Businesses covered by the reforms will have to comply with general obligations imposed on all financial service providers as well as rules for safeguarding customer assets and new rules tailored to address the unique risks of DAPs and tokenized assets, according to the document.

The government also recognized the impact of debanking on the digital asset sector and the broader economy, suggesting that its proposed licensing frameworks will help improve the risk management capability of businesses in the industry, and it would continue to engage with the country's four major banks to support transparency and fairness.

Other plans include considering the implementation of a crypto asset reporting framework to help address tax evasion, expanding the role of its regulatory sandbox, working with the Reserve Bank of Australia on the feasibility and benefits of a wholesale central bank digital currency (CBDC) for financial institutions and exploring its approach toward DeFi.

The commencement dates for the reforms will be set through legislation and invite stakeholder feedback, with the government intending to release draft legislation in 2025 for public consultation.

Monitoring international approaches

The Australian government said its approach has been informed by the actions of other jurisdictions, including the United States, the European Union and Singapore. 

The EU's MiCA regulation aims to balance consumer protection and market integrity while fostering innovation in digital assets, with the Monetary Authority of Singapore taking a similar approach.

Meanwhile, U.S. President Trump has announced a slew of crypto proposals in recent months designed to make America the "crypto capital of the world." Trump signed an executive order on March 6 to create a U.S. Strategic Bitcoin Reserve and Digital Assets Stockpile and is also pushing for the approval of stablecoin and crypto market structure legislation in Congress, reiterating those aims in a speech to the Digital Asset Summit in New York on Thursday.