CryptoSlate
Australia’s securities regulator, ASIC, is consulting on tougher rules for crypto exchanges and custodians, including a capital model with a minimum requirement of A$14 million or 10% of average revenue, whichever is greater. The proposals also cover customer-asset safeguards, trading controls and licensing ahead of a regime taking effect in 2027.
ASIC outlined three possible capital models. Under the first, qualifying independent custody could lower the starting floor to A$200,000, with the final requirement tied to asset values and revenue. Another model sets a A$7 million floor for platforms holding only assets that are not financial products. A third starts at A$2 million, with added requirements based on holdings, revenue and business activities.
Why it matters
The options could make custody arrangements a major cost decision, particularly for smaller exchanges. To qualify for the lower threshold under the first model, a platform would need to place all underlying assets with qualifying external custodians and obtain written assurances about their financial position. The exchange would still be responsible for overseeing those arrangements.
ASIC also proposes stricter segregation and reconciliation of customer assets, quarterly reporting on wallet arrangements, custody-risk disclosures and controls on the use of entrusted assets. Platforms would need express customer authorization for permitted uses and protections for client interests in insolvency.
Market impact
Trading proposals include best-execution requirements for certain intermediaries, access to at least two adequate liquidity sources and limits on exchanges trading as principal on their own platforms, subject to exemptions. ASIC also proposes banning incentives to favor particular tokens and restricting the use of certain related-party stablecoins as regulatory capital.
ASIC says it has received more than 140 applications for digital-asset-related financial services under its existing framework, including over 110 during a transitional relief period that ended in September. Feedback on the proposals is due Nov.
Frequently asked questions
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What capital requirement is ASIC considering for some crypto exchanges?
One proposed model requires net tangible assets of at least A$14 million or 10% of average revenue, whichever is greater, for operators that do not qualify for a third-party custody concession.
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How could independent custody change an exchange’s capital threshold?
Qualifying platforms could face a A$200,000 starting requirement under one model, with the actual threshold also determined by asset values and revenue. They would need to place all underlying assets with qualifying external custodians.
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What other capital models has ASIC proposed?
The alternatives include a A$7 million floor for platforms holding only assets that are not financial products, and a A$2 million starting floor with additional requirements linked to holdings, revenue and activities.
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What customer-asset safeguards are included in the proposals?
ASIC proposes stricter segregation and reconciliation, quarterly reporting on wallet arrangements, custody-risk disclosures and controls on using entrusted assets. Platforms would also need express customer authorization for permitted uses.
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When are feedback and final guidance expected?
Submissions on the proposals close Nov. 27. ASIC expects to issue final guidance and regulatory instruments in March 2027, ahead of the licensing regime taking effect that year.
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