Australian Senate recommends digital assets legislation be passed

This week, The Senate Economics Legislation Committee handed down a report noting that the draft digital assets legislation should be passed.

Should the Senate now pass this Bill, it would be Australia’s first legislation around the digital assets sector.

A key part of the legislation is to require firms operating in Australia to hold an AFSL which is seen as the industry standard in financial services.

Mandy Jiang (pictured above), Executive Director and CFO at CloudTech Group, added, “The Senate Committee’s report highlights an important reality for Australia’s digital asset market, as regulation comes into force, custody will sit at the centre of trust, compliance and consumer protection.

“CloudTech Group supports the Bill’s focus on regulating platforms and custodians rather than the underlying technology. This approach helps ensure that businesses are accountable for their actions, while keeping consumer protection front and centre.

“As Australia moves toward implementation of the digital assets framework, CloudTech Group believes there will be an increased need for robust, purpose‑built custody platforms and processes. Clear standards for safeguarding assets, reconciliation and operational controls will be critical not only for protecting consumers, but also for supporting participation from institutional investors and financial advisers.

“As these investor segments start incorporating crypto into their portfolios, strong custody infrastructure will be essential to building confidence and enabling the next phase of growth in Australia’s digital asset market.

“Effective custody is the backbone of a mature digital asset ecosystem. As the regulatory regime goes live, firms that invest early in compliant custody infrastructure and governance will be best placed to meet expectations and support the sector’s long-term development,” Jiang concluded.

Commenting on the report, Effie Dimitropoulos (pictured above), CEO of AUDD, said, “AUDD supports the progression of the Digital Assets Framework Bill as a necessary step towards greater regulatory clarity and market integrity in Australia. The Bill shows positive momentum towards bringing digital asset platforms into a formal regulatory perimeter. However, we need to implement targeted changes to make the framework useful, globally competitive, and aligned with Treasury’s broader payments reform agenda.

“The report handed down by the Economics Legislation Committee in The Senate rightly acknowledges that digital assets are increasingly intersecting with everyday financial activity and stablecoins are a strong example of this. When appropriately regulated, payment focused stablecoins can support faster settlement, lower costs and improved interoperability across the payments ecosystem.

“What is encouraging in the Committee’s findings is the recognition that not all digital assets present the same risks. Stablecoins used for payments function more like stored‑value or payment instruments than traditional financial products. Treating them as such would align Australia with international peers including the EU, Singapore and Hong Kong, and with Treasury’s broader payments reform agenda.

“Getting this classification right is critical. Over regulation or misclassification risks duplicative licensing, unnecessary compliance costs and slowing adoption at precisely the moment when global momentum is building. A clear, payments‑based framework for stablecoins would provide businesses with the confidence to invest, scale and integrate stablecoins into real‑world use cases such as cross‑border payments, treasury management and on‑chain settlement.

“The Committee also highlights the importance of implementation. Regulatory coordination, realistic transition periods and clear guidance will be essential to ensure innovation is not stalled while firms adapt to the new regime. Clear sequencing across ASIC, Treasury, APRA and AUSTRAC is essential to avoid duplication and regulatory conflict. Transitional relief and “continue operating while applying” mechanisms will be important to maintaining market stability, with ASIC expected to see a high volume of AFSL applications in quick succession.

“Australia has an opportunity to position itself as a world leading jurisdiction for stablecoin innovation. AUDD supports the Bill progressing through Parliament as a foundational step for the industry. With targeted refinements, particularly around definitions, stablecoin treatment and implementation, the framework can strike the right balance between consumer protection, innovation, and global competitiveness,” Dimitropoulos ended.