Australia Proposes New Crypto Regulation Structure, Plans to Integrate Digital Assets Into the Economy

The Australian Government announced an ambitious whole-of-government approach to regulating and integrating digital assets into the broader economy, inspired by work done in the European Union (EU) and Singapore.

In a white paper published by the Australian Treasury, the country's government says it will embrace tokenization, real-world assets (RWAs), and central bank digital currencies (CBDCs) as part of a broader push to modernize its financial system.

While ruling out a retail CBDC for now, the government sees a wholesale CBDC version and tokenized settlement infrastructure as key to unlocking market efficiency and broader asset access.

The government says that the Australian Treasury, the Australian Securities and Investment Commission, as well as the Reserve Bank of Australia are planning to launch pilot trials that use tokenized money, including stablecoins, to settle transactions in wholesale tokenized markets.

"Markets for tokenized assets may be able to increase automation, reduce settlement risk, lessen reliance on multiple financial intermediaries, simplify trading processes, reduce transaction costs, and provide broader access to traditionally illiquid assets," the report reads.

The white paper also presents a licensing structure for crypto exchanges, which will be known in Australia as Digital Asset Platforms (DAPs).

Operators of DAPs will need to meet financial services obligations such as capital adequacy and disclosure requirements while also using third-party custodians to store customer assets.

The Government is also planning on addressing industry concerns of de-banking through its DAP licensing regime, it said in the white paper, to allow for banking partners to better engage in risk management.

This anti-debanking effort in Australia follows continued U.S. hearings on the topic, where Senator Tim Scott’s FIRM Act seeks to stop regulators from using "reputational risk" to block out crypto firms from accessing banking rails.