Australia Proposes Capital, Custody Rules for Crypto

Update (Oct. 15 at 5:35 am UTC): This article has been updated to include a comment from Thomsons partner Liam Hennessy.

Australia’s securities regulator opened consultation Thursday on proposed capital, custody and trading requirements for crypto platforms, as it prepares to implement legislation passed in April that expands oversight of the industry. 

The proposals include three alternative capital models, restrictions on platforms trading for their own account and quarterly reporting of wallets holding customer assets. ASIC also proposes allowing offshore custody while seeking feedback on safeguards if an overseas parent or related company fails. 

“Our proposed guidance and standards acknowledge the increasing role of digital assets and tokenization, including in traditional parts of the financial system,” said ASIC Commissioner Alan Kirkland. 

The proposed guidance and standards would give crypto operators greater clarity on requirements to obtain a license, safeguard customer assets and meet financial requirements under the new framework. The consultation follows Parliament’s passage of the Corporations Amendment (Digital Assets Framework) Act earlier this year.

“ASIC’s release of CP 392 is an important milestone for Australia’s digital asset industry,” Amy-Rose Goodey, CEO of the Digital Economy Council of Australia, told Cointelegraph.  “After years of engagement on regulatory reform, it’s encouraging to see the focus shift towards practical implementation.” 

OKX Australia CEO Shange Chandra also welcomed the proposals, saying they could drive industry consolidation. 

“These standards are appropriately onerous,” he told Cointelegraph. “They will reward operators who have already invested in compliance, capital and custody. They will challenge operators who have waited to make that investment.”

Capital, custody and trading rules in focus 

ASIC is weighing three alternative capital models, including one requiring operators without qualifying third-party custody arrangements to hold at least 14 million Australian dollars ($9.7 million) in net tangible assets or 10% of average revenue, whichever is 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,” Goodey said. 

“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 Chandra. 

The regulator has also proposed allowing offshore custody, while seeking feedback on whether Australian operators should have emergency access to private keys if the overseas parent or related company fails. 

Related: Australia warns unlicensed crypto firms of fines up to 10% of annual turnover

“The proposal not to mandate domestic custody is also significant, recognizing the global nature of digital asset markets,” Goodey said. 

Operators would also have to report custody wallet structures and addresses to ASIC quarterly and retain relevant records for seven years.

Thomsons partner Liam Hennessy said the reporting proposal partly reflected the Australian market’s reliance on offshore infrastructure — as global competition means that digital assets are usually held offshore.

ASIC also proposes restrictions on platforms trading for their own account and accepting benefits to favor particular tokens, targeting potential conflicts of interest. Hennessy said this could test existing trading models.

“Under ASIC’s proposal, an order matching DAP (one that brings client orders together, by order book or by matched principal trading) could not trade as principal on its own platform, and its related bodies corporate could not trade as principal through it,” he said. “There are model-specific exceptions. Groups that rely on an affiliated market maker should look at this first.”

The consultation forms part of ASIC’s 18-month implementation roadmap, published after the Digital Assets Framework Act was passed in April. 

Feedback is due Nov. 27, with ASIC aiming to publish final standards and guidance in March 2027. The law is set to take effect on April 8, 2027, and operators will have until Oct. 7, 2027, to apply for the relevant license and can operate while ASIC assesses their applications. 

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