Australia proposes A$14 million capital rule for crypto firms

Australia’s securities regulator has proposed a minimum capital requirement of A$14 million for some cryptocurrency exchanges and stricter rules for businesses that hold or trade digital assets for customers.

The Australian Securities and Investments Commission released its consultation package on Oct. 15. The proposals cover customer-asset protection, trade execution, conflicts of interest, market misconduct controls and financial reserves.

The rules would support a licensing regime created by the Corporations Amendment (Digital Assets Framework) Act 2026. The law was enacted in April and is due to take effect in 2027. Businesses covered by the law will need an Australian financial services license or additional authorization under an existing license.

ASIC Commissioner Alan Kirkland described the proposals as a response to the growing links between digital assets, tokenization and traditional finance. In a statement, he said the regulator’s guidance recognized “the increasing role of digital assets and tokenization, including in traditional parts of the financial system.”

Under one model in ASIC’s Consultation Paper 392, exchanges without an external-custody concession would need net tangible assets of at least A$14 million or 10% of average revenue, whichever is higher.

Platforms that place all underlying assets with approved independent custodians could face a starting requirement of A$200,000. Their actual threshold would be the highest of A$200,000, 0.5% of average underlying asset value capped at A$7 million, or 10% of average revenue.

Those platforms would need written assurances from external custodians about their financial position. The assurances would generally need support from independent audit reports. The proposals would allow exchanges to use overseas custodians if the arrangements meet the required standards.

ASIC outlined two other capital models. One would set a A$7 million floor for platforms holding assets that are not financial products. Platforms holding financial products would remain subject to the higher requirement. Another model would start at A$2 million and add requirements based on assets, revenue and activities such as brokerage, operating a trading venue and dealing directly with customers.

The proposals would require exchanges to keep detailed records, separate customer assets from their own, disclose custody risks and reconcile holdings more often. ASIC also proposed quarterly reporting on crypto wallet arrangements and addresses, along with controls on the use of entrusted assets.

Platforms would need a customer’s explicit authorization before using underlying assets in permitted arrangements. They would also need safeguards for customers if the business becomes insolvent.

Certain intermediaries would have to seek the best available trade execution and access at least two suitable sources of liquidity. Exchanges would generally be restricted from trading as principal on their own platforms, subject to specified exceptions. They would also be barred from accepting incentives to favor particular tokens.

Operators would need to assess tokens before listing them and establish controls against market manipulation and other misconduct. Financial services licensees could not count certain stablecoins issued, controlled or held by themselves or related entities as regulatory capital.

ASIC said it had received more than 140 applications for digital-asset financial services under the existing framework. More than 110 were submitted during a temporary period of regulatory relief that ended in September.

The regulator is seeking feedback on the proposals’ competitive effects and compliance costs. Submissions are due by Nov. 27. ASIC expects to issue final guidance and regulatory instruments in March 2027.