Australia’s financial watchdog is proposing tougher regulations for cryptocurrency exchanges and digital asset custodians, with new requirements designed to strengthen customer asset protection, improve trading transparency and safeguard the country’s financial system.

The Australian Securities and Investments Commission (ASIC) has introduced proposed standards outlining how crypto firms must manage customer funds, execute trades and maintain adequate financial resources under legislation scheduled to begin next year.

On Thursday, ASIC launched a public consultation on the proposed framework. Businesses covered by the rules would need to obtain the appropriate regulatory license or amend their existing authorization to comply. The consultation closes on November 27, and the regulator expects to publish its final guidance and standards in March 2027.

The proposals represent another milestone in Australia’s efforts to bring the cryptocurrency industry under regulatory arrangements similar to those governing traditional financial services. Parliament approved the legislation in April, placing Australia alongside jurisdictions such as the European Union, Singapore and Hong Kong that have adopted dedicated rules for digital assets.

The regulatory push follows several industry failures that exposed customers to significant financial risks. The collapse of FTX in 2022 left around 30,000 Australian customers unable to access their money. Three years earlier, New Zealand-based exchange Cryptopia went bankrupt after a major cyberattack.

The new requirements are due to take effect on April 8, 2027. Existing crypto businesses will have until October 7, 2027, to apply for the necessary licenses. They can continue operating while ASIC evaluates their applications.

For investors, the framework is expected to clarify how crypto exchanges must store customer assets, execute orders and handle potential conflicts of interest. Companies in the sector will face additional compliance duties and financial standards as part of their obligations to operate legally in Australia.

ASIC Commissioner Alan Kirkland said the regulator was guided by the principle of “same activity, same risk, same regulatory outcome.” The approach is intended to ensure Australia’s regulatory framework aligns more closely with those of comparable international markets.

The consultation paper proposes rules covering the separation and safeguarding of customer assets, transparent trading practices, settlement procedures and sufficient financial resources. It also addresses market manipulation, conflicts of interest and the processes platforms use to execute customer orders.

ASIC reported that it had received more than 140 applications from businesses seeking authorization to provide financial services linked to digital assets. The regulator noted that payment-related stablecoins are being handled separately under Australia’s wider payment services reforms.