Australia’s Financial Regulator Moves to Bring Crypto Under Existing Laws

Australia's financial regulator, the Australian Securities and Investments Commission (ASIC), is adopting a functional approach to cryptocurrency regulation, asserting that digital assets should be governed by their economic purpose rather than the underlying technology. Rhys Bollen, head of fintech at ASIC, stated at the Melbourne Money & Finance Conference on March 11, 2026, that blockchain and crypto are essentially new infrastructure for carrying out established financial functions like payments and risk management.

Regulating by Economic Function

ASIC's stance emphasizes that if a tokenized product functions like a security, it will be regulated as such under existing securities legislation. Similarly, stablecoins would fall under payment services law. The regulator's focus is on the intermediaries, such as custody providers and trading platforms, which are identified as the primary sources of consumer harm. ASIC also maintains that regulatory obligations apply even to decentralized protocols if identifiable parties influence their design or economic outcomes.

Legislative Framework and Deadlines

This regulatory direction aligns with Australia's upcoming Digital Assets Framework Bill 2025, expected to pass parliament in 2026. The bill mandates Australian Financial Services Licence (AFSL) requirements for Digital Asset Platforms and Tokenised Custody Platforms. To facilitate compliance, ASIC has extended a sector-wide “no-action” position until June 30, 2026, for firms working towards licensing. Additionally, digital asset businesses must register with AUSTRAC and establish anti-money laundering programs by March 31, 2026.

Economic Impact and Penalties

The Australian government anticipates that a robust digital asset framework could yield A$24 billion in annual productivity gains. However, non-compliance carries significant penalties, with breaches potentially leading to fines of up to 10% of annual turnover. Certain smaller operators are exempt; platforms holding less than A$5,000 per customer and processing under A$10 million in annual transactions are not subject to the new licensing requirements.

Industry Reactions and Banking Relationships

While some industry figures have expressed concerns about the broad scope of regulatory powers and called for clearer definitions, there is a point of alignment regarding de-banking. The new framework, by granting qualifying firms clear legal status through an AFSL, could alleviate the regulatory uncertainty that has led financial institutions to sever ties with crypto firms. This practical benefit has garnered cautious support from parts of the industry. The effectiveness of ASIC's substance-over-form doctrine will become clearer as the June 2026 licensing deadline approaches.