Australia Proposes Crypto Regulations to Boost Digital Asset Integration

The Australian government is taking significant steps toward regulating the crypto sector, aiming to foster innovation while ensuring investor protection. The proposed regulatory framework seeks to integrate digital assets more effectively into the country’s financial ecosystem, reflecting the growing global shift toward recognizing and managing crypto assets within traditional economic structures.

Australia Plans to Adopt Tokenization

In a recently released white paper, the Australian Treasury noted the government’s commitment to adopting tokenization, real-world assets (RWAs), and central bank digital currencies (CBDCs) as key components of its broader strategy to modernize the financial system.  Although the government has ruled out a retail CBDC for the time being, it views a wholesale CBDC and tokenized settlement infrastructure as essential for enhancing market efficiency and expanding access to a wider range of assets.

The government further noted that the Australian Treasury, the Australian Securities and Investments Commission (ASIC), and the Reserve Bank of Australia (RBA) are preparing to conduct pilot trials utilizing tokenized money, such as stablecoins, for settling transactions within 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 said.

A Crypto Framework

The white paper also introduces a licensing framework for crypto exchanges, which will be recognized in Australia as Digital Asset Platforms (DAPs). Under this framework, DAP operators must comply with financial services regulations, including capital adequacy and disclosure requirements, while also ensuring customer assets are securely stored through third-party custodians. 

The Australian government also aims to tackle industry concerns regarding de-banking through its DAP licensing framework, as the white paper outlines, enabling banking partners to enhance their risk management practices and engagement with the sector.  

Australia ETFs on The Rise

While the country proposes crypto regulations to enhance digital assets, the country’s crypto exchange-traded funds (ETFs) market has heated up with rising flows and growing rivalries. 

The country currently has five Bitcoin ETFs and three Ethereum ETFs. The chief executive of VanEck, Australia’s biggest ETF, noted that VBTC is Australia’s leading and fastest-expanding Bitcoin ETF, managing nearly $250 million in assets. Its rapid growth has been driven by strong market momentum and increasing demand from local investors.