The Growing Systemic Risk in Crypto Exchanges: Lessons from Australia's DAEX and Global FTX Fallout

The collapse of FTX in late 2022 exposed a seismic vulnerability in the crypto ecosystem, triggering a global reevaluation of regulatory frameworks and capital preservation strategies. As the industry grapples with systemic risks, Australia's regulatory response-anchored by the Corporations Amendment (Digital Assets Framework) Bill 2025-offers a critical case study in balancing innovation with stability. This article examines Australia's approach alongside global post-FTX reforms, assessing how regulatory preparedness and capital preservation measures are reshaping the crypto landscape.

Australia's Regulatory Overhaul: A Post-FTX Response

In 2025, Australia introduced the Corporations Amendment (Digital Assets Framework) Bill 2025 to address regulatory gaps and prevent market failures akin to FTX. The legislation mandates that digital asset platforms operating in the country obtain an Australian Financial Services Licence (AFSL), subjecting them to enforceable standards for custody, transparency, and risk management. Smaller platforms handling less than $5,000 per customer and under $10 million in annual transactions are exempt, aligning with existing frameworks for non-cash payment services.

This move reflects a broader shift toward harmonizing crypto regulation with traditional finance. By requiring platforms to safeguard customer assets and adhere to anti-money laundering (AML) protocols, Australia aims to mitigate risks of insolvency and fraud. Notably, the government extended the stablecoin class exemption through June 2028, allowing licensed intermediaries to distribute stablecoins without additional licensing, thereby fostering innovation while maintaining oversight.

Global Trends: From the U.S. to the EU

Australia's reforms mirror global efforts to stabilize the crypto sector post-FTX. In the U.S., the GENIUS Act and CLARITY Act have established clear guardrails for stablecoins and digital assets. The GENIUS Act, for instance, mandates stablecoin issuers to maintain 1:1 reserve backing with U.S. currency or high-quality liquid assets, enforced through monthly audits. This framework ensures liquidity and capital management tailored to risk profiles, reducing the likelihood of cascading failures.

Similarly, the EU's Markets in Crypto-Assets (MiCA) Regulation has imposed stringent consumer protection and stablecoin oversight, emphasizing transparency and operational resilience. These measures collectively aim to prevent the kind of opacity that fueled FTX's collapse, while encouraging institutional adoption through regulatory clarity.

Capital Preservation: A New Baseline for Exchanges

Post-FTX, capital preservation has become a non-negotiable requirement for crypto exchanges. The SEC's no-action letters for projects like the Depository Trust Company's tokenization pilot and the Fuse Crypto Token illustrate a regulatory push to balance innovation with accountability. By reducing enforcement risks for compliant startups, these policies incentivize robust capital management practices.

In Australia, the emphasis on AFSL compliance and asset segregation aligns with this ethos. Platforms must now demonstrate financial resilience, ensuring customer funds are insulated from operational risks. This shift not only protects retail investors but also restores institutional confidence-a critical factor in mitigating systemic contagion.

Conclusion: A Path Forward

The post-FTX era has underscored the necessity of proactive regulation. Australia's Digital Assets Framework and global counterparts like MiCA and the GENIUS Act represent a paradigm shift: crypto is no longer a fringe asset class but a systemic component of finance requiring rigorous oversight. While challenges remain-such as enforcing compliance across decentralized platforms-the emphasis on capital preservation and transparency is a step toward a more resilient ecosystem.

For investors, the lesson is clear: regulatory preparedness is now a key metric for assessing exchange reliability. As 2026 approaches, the interplay between innovation and oversight will define the next chapter of crypto's evolution.