Australia’s Senate Committee Endorses Landmark Bill to Regulate Digital Asset Platforms

Australia’s Senate Economics Legislation Committee has given its strong backing to a pivotal bill designed to bring the nation’s burgeoning digital asset sector under the purview of its existing financial services regulations. The committee has recommended that the Corporations Amendment (Digital Assets Framework) Bill 2025 be passed, marking a significant stride towards establishing a bespoke licensing framework for "digital asset platforms" (DAPs) and "tokenized custody platforms" (TCPs). This legislative move, confirmed on March 16, aims to address critical gaps in regulatory oversight, particularly concerning platforms that hold customer assets, a concern amplified by the high-profile collapses of prominent digital asset businesses such as FTX.

The Corporations Amendment (Digital Assets Framework) Bill 2025 was initially introduced in November 2025 by Assistant Treasurer and Financial Services Minister Daniel Mulino. The core of the bill proposes to classify DAPs and TCPs as financial products under both the Corporations Act and the Australian Securities and Investments Commission (ASIC) Act. This reclassification would necessitate that most centralized exchanges and tokenized custody businesses involved in holding client assets adhere to the Australian Financial Services Licence (AFSL) regime.

Under the proposed framework, licensed platforms will be mandated to meet stringent custody and settlement standards set by ASIC. Furthermore, they will be required to implement tailored disclosure rules specifically for retail clients, ensuring greater transparency and protection. Operating under these licenses will also entail compliance with platform-specific conduct and governance requirements, designed to foster a more robust and trustworthy digital asset ecosystem.

However, the bill includes provisions for exemptions to mitigate undue burdens on smaller entities. Smaller providers with annual transaction volumes falling below AUD 10 million (approximately USD 7 million) will be exempt from the full licensing requirements. Additionally, certain public blockchain infrastructure providers are also slated for exemption, acknowledging their distinct operational models.

The report from the Senate Economics Legislation Committee, which has been publicly shared, includes valuable insights and concerns raised by various industry stakeholders. These submissions highlight potential ambiguities and areas requiring careful consideration as the bill progresses.

Industry Groups Raise Concerns Over Terminology and Scope

Several industry groups, including prominent law firm Piper Alderman, have voiced concerns regarding the broad definitions of "digital token" and "factual control" within the bill. These groups argue that the current wording could inadvertently encompass entities such as wallet software providers and infrastructure providers involved in non-unilateral-control arrangements. A particular point of contention is the potential misclassification of participants in common multi-party computation (MPC) configurations, where control over assets is distributed.

US blockchain firm Ripple Labs has also weighed in, supporting the concept of "control" as the appropriate basis for determining regulatory jurisdiction. However, Ripple Labs has urged lawmakers to refine the bill to better accommodate contemporary security architectures, such as MPC wallets. The firm warned that a strict interpretation of the "factual control" test could lead to technology-only providers holding a single key shard being mistakenly identified as regulated custodians. Ripple Labs has strongly advocated for clarification, emphasizing that an entity should not be deemed to exercise factual control unless it possesses the ability to unilaterally transfer an asset without requiring the client’s cooperation.

The committee has acknowledged these concerns, recognizing the validity of the feedback provided by industry participants. Nevertheless, the committee has indicated its preference for the Treasury’s proposed approach, which favors refining the regulatory perimeter through future subordinate regulations rather than undertaking a wholesale rewriting of the core definitions within the bill itself. This approach suggests a willingness to adapt and clarify the legislation as the digital asset landscape evolves.

Coinbase Welcomes Progress, Highlights Debanking Risks

Coinbase Australia director and APAC managing director, John O’Loghlen, has welcomed the Senate committee’s recommendation, describing it as "an important step for Australia’s standing in the global digital economy." O’Loghlen emphasized that Australia possesses the necessary capital and talent to become a leader in the digital assets space, but stressed that the absence of clear regulatory guidelines has been a significant impediment to unlocking this potential.

In addition to expressing optimism about the bill’s progress, O’Loghlen also raised a critical concern regarding the ongoing issue of "debanking." He highlighted that this anti-competitive practice remains prevalent despite the government’s endorsement of measures to address it as far back as 2022. O’Loghlen urged Canberra to prioritize the implementation of recommendations put forth by the Council of Financial Regulators to combat debanking effectively.

With the Senate Economics Legislation Committee’s endorsement secured, the Corporations Amendment (Digital Assets Framework) Bill 2025 is now poised to proceed to the Senate for further debate. A final vote on the bill will take place at a later date, signaling the final legislative hurdle before it can become law. This development represents a significant step forward in Australia’s efforts to create a comprehensive and modern regulatory framework for digital assets, aiming to foster innovation while safeguarding consumers and market integrity.