Australia to impose crypto rule breaches fines up to 10% of turnover

Australia to impose crypto rule breaches fines up to 10% of turnover

Australia has taken a significant step in regulating the cryptocurrency sector by proposing new legislation that could impose penalties of up to 10% of annual turnover for non-compliance. The draft bill, announced by Assistant Treasurer Daniel Mulino at the Digital Economy Council of Australia’s regulatory summit, aims to bring crypto exchanges and custody providers under the Corporations Act, thereby subjecting them to the same stringent financial standards as traditional financial services .

The proposed legislation introduces two new financial products: a "digital asset platform" and a "tokenized custody platform." Service providers of these platforms will be required to obtain an Australian Financial Services License (AFSL), which will be issued by the Australian Securities and Investments Commission (ASIC). This move is designed to enhance consumer protection and ensure that businesses operate within a clear regulatory framework .

Penalties for non-compliance are severe, with breaches potentially resulting in fines of up to 16.5 million Australian dollars ($10.8 million), three times the benefit obtained, or 10% of annual turnover—whichever is greater. However, the legislation also includes exemptions for smaller, low-risk platforms that process less than $10 million annually or hold less than $5,000 per customer. This exemption is intended to focus regulatory attention on firms with significant consumer risks .

The draft bill is part of Australia's broader digital asset roadmap, which seeks to align the country's regulatory approach with international best practices. The proposed rules focus on platforms facilitating financial products and custody services, while non-financial token issuers and utility tokens are not subject to the new requirements unless linked to financial services. This approach aims to foster innovation while maintaining robust consumer protections .

The announcement of the draft legislation follows years of debate and industry frustration over Australia's slow regulatory approach. The proposed rules aim to provide clarity and certainty to the crypto sector, which has been operating in regulatory limbo. The formal consultation period for the draft bill is now open, with submissions due by October 24 .

In summary, Australia's proposed crypto regulations represent a significant shift towards more stringent oversight and consumer protection in the cryptocurrency sector. The new rules aim to legitimize good actors, shut out bad ones, and provide a clear regulatory framework for businesses and consumers alike.