"Exploring Legalities of Crypto in Australia by 2025: A Comprehensive Guide to Regulations"
In the ever-evolving world of cryptocurrency, Australia is taking significant strides to establish a robust regulatory framework that ensures compliance, risk management, and market development.
As of early 2025, around 31% of Australian adults own or have owned cryptocurrency. Recognising the growing importance of this digital asset class, the Australian government is taking action to protect consumers and combat financial crime.
Crypto companies operating in Australia are required to obtain an Australian Financial Services Licence (AFSL) if they engage in activities involving financial products or services. This includes exchanging one digital currency for another, transferring digital assets on behalf of clients, custody or management of digital assets, and providing financial services related to the issuance or sale of digital currencies.
For Digital Currency Exchange (DCE) Providers, customer identity verification (KYC) is mandatory, with reliable, government-recognized documentation required. DCEs must also ensure consumer protections and cybersecurity standards, including safeguarding customer funds with robust security systems.
Crypto businesses seeking an AFSL in Australia must comply with obligations under the Corporations Act 2001, including providing Financial Services Guides (FSGs) and Product Disclosure Statements (PDSs).
The scope of regulated crypto activities in Australia will expand from March 31, 2026, with AUSTRAC's regulatory scope extending to cover all digital asset service providers. This aligns with the Financial Action Task Force (FATF) standards, transitioning digital currency exchanges into Virtual Asset Service Providers (VASPs).
The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024, effective from March 2026, imposes new due diligence and reporting obligations on VASPs, covering activities such as asset exchanges, custody, and transfers.
The Australian Taxation Office (ATO) will also increase its enforcement, focusing on detailed data collection from crypto exchanges and cracking down on unreported activities, including decentralized finance (DeFi) transactions that trigger capital gains tax events.
Australia's latest updates on crypto regulations for 2026 include the introduction of the Crypto Asset Reporting Framework (CARF) from January 2026, which imposes new crypto tax reporting requirements to enhance compliance globally.
Meanwhile, the Reserve Bank of Australia and ASIC are facilitating trials for central bank digital currencies (CBDCs) and stablecoins, temporarily easing some regulations to test tokenized asset markets and identify risks.
The regulatory landscape in Australia for 2026 involves intensified scrutiny and enforcement under existing tax laws, new tax reporting frameworks, broad AML/CTF reforms expanding the definition and oversight of virtual assets, and progressive regulatory testing of crypto innovations in collaboration with banks and market participants.
However, it's important to note that as of the time of publishing the article, Australia has not yet implemented the FATF's Travel Rule for cryptocurrency transactions, but it is expected to be finalized and published in August 2025 and take effect on March 31, 2026.
The rapid expansion of Australia's digital asset market has outpaced the development of relevant regulatory frameworks. Nonetheless, the Australian Securities and Investments Commission (ASIC) regulates crypto assets that are classified as financial products, and DCEs in Australia must register with AUSTRAC before offering services and renew their registration every 3 years.
DCEs in Australia must implement a tailored AML/CTF compliance program, including regular internal audits and staff training. DCEs are also required to implement Know Your Customer Due Diligence (CDD) for most customers and Enhanced Due Diligence (EDD) for high-risk customers or Politically Exposed Persons (PEPs). DCEs must monitor transactions for suspicious activity and submit reports to AUSTRAC.
Decentralized Finance (DeFi) is not currently regulated specifically in Australia, but ASIC's regulatory frameworks focus on centralized entities providing financial services. The Australian Treasury is working on developing a licensing regime for DAPs.
Cryptocurrency is legal in Australia but is not considered legal tender. As the regulatory landscape evolves, it's crucial for businesses providing digital currency exchange services to stay informed and comply with the relevant obligations.
The Reserve Bank of Australia has launched Project Acacia, a three-year initiative to explore opportunities to boost the efficiency, transparency, and resilience of wholesale markets through tokenization and new settlement infrastructure. This project underscores Australia's commitment to embracing the potential of blockchain technology while maintaining a strong focus on regulatory compliance and risk management.
Technology plays a significant role in the regulation of cryptocurrency in Australia, with crypto companies and Digital Currency Exchange (DCE) providers required to implement robust security systems to safeguard customer funds. Additionally, the Australian Taxation Office uses technology to collect detailed data from crypto exchanges and crack down on unreported activities.
