Australia's financial regulator on October 15 published what amounts to a full operating manual for crypto exchanges and custodians, setting an A$14 million capital floor for the largest operators and proposing to ban platforms from trading against their own customers. Consultation Paper 392 (CP ...
"Our approach is based on the principle of 'same activity, same risk, same regulatory outcome' to align Australia with the approach of comparable overseas jurisdictions." — Alan Kirkland, Commissioner, Australian Securities and Investments Commission
Australia's financial regulator on October 15 published what amounts to a full operating manual for crypto exchanges and custodians, setting an A$14 million capital floor for the largest operators and proposing to ban platforms from trading against their own customers. Consultation Paper 392 (CP 392) converts the Corporations Amendment (Digital Assets Framework) Act 2026, which received Royal Assent on April 8, into enforceable standards that take effect April 8, 2027. The package covers custody, settlement, disclosure, conflicts of interest and financial resources across two newly regulated categories — digital asset platforms (DAPs) and tokenised custody platforms (TCPs).
The timing is deliberate. ASIC's sector-wide no-action period expired September 30, 2026, and the regulator has logged more than 140 licence applications from firms seeking authorisation. Of those, over 110 arrived during the forbearance window that ran from October 2025 through September 2026. CP 392 now tells those applicants exactly what compliance looks like. With approximately 4.6 million Australians — 17.7% of the population — holding crypto, the rules will reshape a retail-heavy market where Binance, Independent Reserve and Coinbase compete for local volume.
The regulatory chain that produced CP 392 traces to November 2022. When FTX Australia collapsed, 30,000 local users lost access to funds. FTX had obtained its Australian Financial Services Licence (AFSL) through a company acquisition, effectively sidestepping ASIC's standard scrutiny for new licensees. On November 16, 2022, then-Treasurer Jim Chalmers announced the government's intention to legislate digital asset custody and exchange standards.
That intention took three and a half years to become law. The Corporations Amendment (Digital Assets Framework) Bill passed Parliament on April 1, 2026, and received Royal Assent one week later. The Act creates two regulated product categories — DAPs and TCPs — and mandates that operators hold an AFSL. A transition period runs until April 8, 2027, when enforcement begins.
ASIC had meanwhile updated Information Sheet 225 (INFO 225) in December 2025, clarifying how existing financial services law applies to digital assets. The regulator opened a no-action window, allowing unlicensed firms to continue operating while they applied. That window closed September 30, 2026. Firms that failed to apply by then face civil and criminal penalties, including potential fines reaching 10% of annual turnover.
CP 392 is not the legislation itself — it is ASIC's proposed approach to the standards and regulatory guidance required to implement the Act. The consultation covers four areas:
ASIC attached preliminary drafts of the legal instruments to the consultation but noted that "the final form of the instruments may change considerably." Comments close November 27, 2026. Final instruments are due March 2027.
The scope encompasses both pure-play crypto exchanges and tokenised custody platforms that record real-world assets as digital tokens. This dual-track approach distinguishes Australia's framework from jurisdictions that regulate only spot crypto trading.
CP 392 proposes three NTA models, tiered by risk profile and custody arrangements. The headline figure — A$14 million — applies to the most capital-intensive structure.
| Model | Base NTA Floor | Custody Condition | Revenue Overlay | |-------|---------------|-------------------|-----------------| | Model 1 | A$14 million | No qualifying third-party custody | 10% of average revenue, whichever is greater | | Model 2 | A$7 million | Non-financial-product assets only | 10% of revenue | | Model 3 | A$2 million | Activity-based additions (A$500K–A$1M per service type) | 10% of revenue, plus 0.5% of assets held (capped at A$14M) |
All three models offer a custody concession: operators that place all client assets with a qualifying independent custodian can reduce the floor to A$200,000, 0.5% of average underlying asset value (capped at A$7 million), or 10% of average revenue — whichever is greatest.
The structure creates a clear incentive: outsource custody and your capital burden drops by as much as 98.6%. ASIC is effectively pushing the industry toward specialist custodians, a pattern already visible in traditional finance.
One notable restriction: stablecoin holdings issued by the licensee or a related entity cannot count toward regulatory capital. This prevents issuers from inflating NTA with their own liabilities.
The asset-holding standards represent the most operationally burdensome component of CP 392. Requirements include:
Overseas custody arrangements remain permitted, meaning international custodians such as Coinbase Custody, BitGo or Fireblocks can serve Australian platforms without local incorporation — provided they meet ASIC's assurance and audit standards.
Under proposal C3.3, order-matching digital asset platforms are "generally prohibited from trading as principal on their own platforms or those operated by related companies." This addresses a core failure mode exposed by FTX, where the exchange used customer funds to support proprietary trading through Alameda Research.
Exceptions exist. Proposal C3.4 preserves room for disclosed brokerage arrangements and principal-trading models with explicit customer consent. But the default posture is prohibition — platforms must prove their trading activity is permissible, not the other way around.
Additional conflict-of-interest provisions include:
The token listing provisions deserve separate attention. ASIC's proposal requires platforms to establish admission rules for digital tokens, including criteria for evaluating a token's risk profile before listing. Platforms must also maintain ongoing surveillance of listed tokens.
The prohibition on listing incentives is aimed squarely at the practice of token projects paying exchanges for listing priority. In traditional equity markets, listing fees are standard but heavily regulated. ASIC is importing that principle into digital assets, requiring that any commercial arrangement around listing be disclosed and free from conflicts.
Market maker oversight requirements mandate that platforms identify their liquidity providers and monitor trading patterns for manipulative behaviour. This aligns with standards in traditional equity and derivatives markets, where designated market makers operate under exchange surveillance.
Australia's framework is among the most prescriptive in the Asia-Pacific region. A capital comparison across major jurisdictions:
| Jurisdiction | Capital Requirement | Framework | |-------------|-------------------|-----------| | Australia (CP 392) | Up to A$14M (~US$9.7M) | AFSL-based, April 2027 | | Hong Kong | HK$5M (~US$640K) for exchanges; HK$25M (~US$3.2M) for stablecoin issuers | SFC/HKMA licensing | | Singapore | SGD 250K (~US$185K) | MAS licensing | | Japan | JPY 10M (~US$65K) | JFSA registration | | EU (MiCA) | €150K–€350K for CASPs; €350K minimum for stablecoin issuers | Passportable EU licence |
At up to A$14 million, Australia's top-tier requirement exceeds every listed APAC comparator by a wide margin. Even with the custody concession (A$200K floor), the tiered structure means mid-sized operators face materially higher bars than Singapore or Japan.
Unlike MiCA, Australia's framework offers no passporting mechanism. Each APAC jurisdiction issues a territorial licence. This means a firm licensed in Singapore gains no automatic access to Australia, and vice versa. The result is a fragmented regional landscape where compliance costs multiply across borders.
ASIC Commissioner Alan Kirkland positioned the approach as deliberately aligned with international norms, citing the principle of "same activity, same risk, same regulatory outcome." The actual capital numbers suggest Australia is benchmarking closer to traditional financial market standards than to crypto-specific frameworks in peer jurisdictions.
The practical impact splits along two lines: scale and structure.
Large operators (Binance, Coinbase, Independent Reserve) can likely absorb A$14 million NTA requirements. Binance, which returned to Australian banking rails via PayID and BSB transfers in January 2026, holds 39.2% of global centralised exchange volume. The capital floor is manageable at that scale.
Smaller platforms face a consolidation trigger. A$14 million in net tangible assets is a material barrier for niche exchanges. The custody concession — reducing the floor to A$200,000 with qualifying independent custodians — creates a viable path, but it requires surrendering control over client assets. For platforms that differentiate on self-custody features, this represents a structural constraint.
The timeline is tight:
| Date | Milestone | |------|-----------| | October 15, 2026 | CP 392 published | | November 27, 2026 | Public comment period closes | | March 2027 | Final standards and guidance issued | | April 8, 2027 | Licensing requirement takes effect |
That leaves approximately five months between final rules and enforcement — a compressed window for firms still processing their AFSL applications. ASIC has already received over 140 applications, and processing at that volume will test the regulator's capacity.
CP 392 converts Australia's digital asset legislation into an operational rulebook. The capital requirements are among the highest globally for crypto-specific regulation. The proprietary trading ban, custody segregation mandates and token listing restrictions import traditional financial market standards into digital assets with limited concessions to industry norms.
The economic logic is straightforward: higher barriers reduce the number of operators, consolidate volume among better-capitalised firms, and shift custody risk to specialist providers. Whether this improves consumer protection without pushing activity offshore depends on enforcement and on how neighbouring jurisdictions — particularly Singapore and Hong Kong with their lower capital thresholds — absorb displaced volume.
The 140 licence applications suggest the industry is engaging rather than retreating. But the gap between applying for a licence and meeting A$14 million in NTA is substantial. The next five months will determine how many of those 140 applicants become licensed operators — and how many exit the Australian market entirely.