Crypto Platforms Face ASIC Oversight – Key Takeaways for Brokers & Advisors

The Australian Government has released draft legislation in September 2025 to tighten oversight of cryptocurrency exchanges and custodians by bringing them under existing financial services laws^[1].  The proposal would require crypto asset platforms to obtain an Australian Financial Services Licence (AFSL) and comply with similar standards as traditional finance, overseen by ASIC (Australian Securities and Investments Commission) instead of just AUSTRAC^[2][3].  These reforms aim to legitimise compliant operators and filter out “weak operators” in the market after recent high-profile failures^[4]. Overall, the draft framework seeks to enhance consumer protection and certainty in the digital asset sector while supporting innovation. 

In parallel, regulators are developing a payments licensing framework for stablecoin issuers^[12], with ASIC already granting interim relief that allows certain AUD-pegged stablecoins to operate under oversight without a full licence^[11]. These stablecoin measures complement the exchange licensing reforms as part of a holistic strategy for digital asset regulation. 

AFSL licensing for digital asset platforms and custodians 

Under the draft laws, any “digital asset platform” (exchange or brokerage) or “tokenised custody platform” (custodian) must meet AFSL licensing requirements^[2]. Key points include: 

Licensing and oversight 

Crypto platforms will be formally classified as financial services, meaning operators must obtain an AFSL and will be regulated by ASIC (moving from the current AUSTRAC-only regime)^[2]. This aligns crypto businesses with the obligations of other finance providers and integrates them into the Corporations Act framework^[1]. 

Governance and standards 

AFSL holders are expected to operate efficiently, fairly and transparently, so crypto platforms would need to implement robust governance, risk management, and compliance controls^[5]. Minimum standards for custody of assets, conflict of interest policies, and dispute resolution systems will apply to safeguard client funds^[6]. Exchanges will likely be required to publish a “Platform Guide” (similar to a product disclosure statement) outlining their services, fees, and risks for users^[7]. 

Scope of services 

The rules extend to ancillary digital asset services like staking, wrapped tokens, and settlement operations, not just spot trading^[8].  Firms issuing tokenised assets (e.g. asset-backed tokens) would also come under appropriate oversight. Smaller platforms below certain asset or client money thresholds may enjoy limited relief, but most medium and large players are covered^[6]. 

Consumer protection goal 

Regulators explicitly aim to prevent issues seen in past crypto collapses (e.g. frozen withdrawals, commingled funds, insolvencies). By enforcing “bank-grade” requirements, the law is meant to increase trust in the sector and protect retail investors, without unduly hampering innovation^[4][9].  Penalties for non-compliance are expected to be significant (potentially up to the greater of A$16 million or 10% of turnover, as signalled in initial proposals) to ensure only trustworthy operators remain in the market^[10]. 

Implications for wealth managers and brokers 

The draft regime may impact BetterX clients who facilitate crypto investments. Important implications may include: 

• AFSL required for crypto advice/dealing: Once implemented, crypto assets will be treated as financial products. Anyone providing advice on, brokering, or dealing in crypto for clients will need to hold an AFSL or operate under an AFSL (just as they would for stocks or managed funds). This means if your business involves recommending or arranging crypto investments, you must obtain an AFSL or become an authorised representative of an AFSL holder. 

• Consider CAR arrangements: Impacted firms may consider a Corporate Authorised Representative (CAR) arrangement to legally continue offering crypto services. In a CAR setup, your company can operate under another entity’s AFSL – for example, partnering with a licensed provider – to meet compliance requirements while the new licensing regime is phased in. This can be a faster interim solution than obtaining your own licence, though ultimately some may choose to pursue their own AFSL over time. 
• Wholesale vs retail clients – new distinctions: The draft rules will draw a line between wholesale (institutional/sophisticated) and retail investors in crypto. Serving retail clients will trigger additional obligations, notably providing compliant disclosure documents like a Product Disclosure Statement (PDS) for any crypto-related financial product, and adhering to retail client protections (e.g. suitability assessments, cooling-off rights). If your crypto services cater only to wholesale clients, the compliance burden is lighter (no PDS or retail licensing provisions), but you must ensure those clients meet the legal wholesale investor criteria. All client categories will still expect high standards of risk management and transparency. 

Transitional period – prepare now 

The government has indicated a transitional period (likely ~12 months) will apply once the law is passed, allowing existing operators to continue running while they seek licences^[11]. This is effectively a grace period, and impacted firms should use this time to initiate compliance and licensing strategies now. Don’t wait for the last minute – begin assembling the documentation, resources, and agreements (e.g. CAR status or AFSL application) needed to meet the upcoming requirements. Early preparation will ensure a smooth transition and avoid disruption to your crypto services. 

BetterX – compliance and next steps 

BetterX welcomes the move toward clearer regulation and has positioned itself as a high-compliance, institutional-grade platform. We are already registered with AUSTRAC as a digital currency exchange and our AFSL strategy is well underway, in anticipation of the new regime. BetterX operates with robust governance, risk management, and security standards that meet or exceed traditional financial industry norms. 

What this means for you 

BetterX will continue to support all client trading and investment activities through the transition. Our team is working to ensure a seamless shift to the licensed framework, so that you can focus on your clients. We will provide further updates and guidance as the law progresses (the draft is open for consultation until 24 October 2025). In the meantime, please review how the impending AFSL requirements affect your business model – especially if you deal with retail investors – and consider steps like the CAR arrangements mentioned above. BetterX remains committed to helping our professional clients navigate these regulatory changes while maintaining the highest service standards. Contact us to learn how BetterX can keep your crypto services compliant and future-ready.