Australia’s New Crypto Rules Set Industry Standards on VASPs

Australia is enhancing its regulatory framework for Virtual Asset Service Providers (VASPs), aiming to set high industry standards and align with global trends.

• Australia’s regulatory framework targets VASPs, including exchanges and custodial wallets.
• A simpler licensing regime will be introduced for VASPs.
• The government plans to address debanking and explore CBDCs, tokenization, and DeFi.
• Pakistan is also advancing its digital asset sector with the Pakistan Crypto Council.

Australia’s latest move in the cryptocurrency space is a bold step towards regulating Virtual Asset Service Providers (VASPs). VASPs, which include crypto exchanges, custodial wallets, and brokerages, will now face the same stringent financial obligations as traditional financial institutions. This new framework is designed to align with the regulatory approaches of the European Union and Singapore, reflecting a global push towards more structured crypto governance.

The introduction of a simpler licensing regime is a key highlight. VASPs will now need an Australian financial services license (AFSL), which is more accessible than the previous market licenses. This change is intended to encourage more players to enter the market while maintaining regulatory oversight. The Australian Securities and Investments Commission (ASIC) will oversee these digital asset firms, ensuring they adhere to the new standards. Specific thresholds for requiring an AFSL have been set at $1500 per client or $5 million in aggregate assets held by the platform provider.

Debanking, the practice where banks refuse to service VASPs, has been a significant hurdle for the crypto industry. Australia’s government is taking steps to better understand and address this issue, ensuring that VASPs can access essential banking services. This commitment is a positive development for businesses looking to operate without the fear of being cut off from financial lifelines.

Looking ahead, Australia is also exploring the potential of a wholesale Central Bank Digital Currency (CBDC), though there is no clear public interest in a retail CBDC at this stage. Additionally, the government is keeping an eye on tokenization and Decentralized Finance (DeFi). Tokenization, akin to turning a physical asset like a house into a digital token, is seen as a way to enhance the efficiency of asset management on the blockchain. DeFi, on the other hand, represents a shift towards decentralized financial systems, challenging traditional banking models.

On the global stage, Pakistan is making significant strides in the digital asset sector. The newly formed Pakistan Crypto Council (PCC), led by Finance Minister Muhammad Aurangzeb and Chief Advisor Bilal bin Saqib, is driving efforts to regulate and promote digital assets. With an estimated 15-20 million digital asset holders, Pakistan is consistently among the top adopters globally. The PCC aims to establish clear regulatory guidelines, engage with international organizations, and promote responsible innovation. The diverse leadership of the PCC, including the Governor of the State Bank of Pakistan and the Chairman of the Securities and Exchange Commission, underscores a comprehensive approach to integrating digital assets into the financial system.

The global influence of President Trump’s policies on digital assets cannot be ignored. His administration’s approach, marked by an executive order signed on January 23, 2025, to support the growth of the U.S. crypto industry, has pushed governments worldwide to reevaluate their stances. This order focuses on promoting U.S. dollar-backed stablecoins, protecting crypto companies’ access to banking services, and providing regulatory clarity. The establishment of the President’s Working Group on Digital Asset Markets, chaired by David Sacks, signals a shift towards a more permissive crypto environment in the U.S. This shift is likely to influence other countries’ regulatory approaches, given the U.S.’s significant role in the global financial system. Learn more about Trump’s influence on global crypto policy.

While these regulatory changes promise a safer and more innovative financial future, they also come with challenges. The crypto industry must navigate these new rules while continuing to push the boundaries of what’s possible with blockchain technology. As we champion decentralization, freedom, and privacy, it’s crucial to maintain a critical eye on how these regulations might impact the ethos of the crypto revolution.

“We want to seize these opportunities and encourage innovation at the same time as making sure Australians can use and invest in digital assets safely and securely with appropriate regulation,” – Treasury, Australia.

“We want to have regulatory clarity. We need to have a legal framework that is pro-business…we need institutional adoption,” – Bilal Bin Saqib, Pakistan Crypto Council.

Here are some key takeaways and questions to consider:

• What is the aim of Australia’s new regulatory framework?

  The aim is to impose stricter financial industry standards on VASPs, ensuring consumer protection, market integrity, and encouraging innovation.

• How will the licensing for VASPs change in Australia?

  VASPs will transition from needing market licenses to the easier-to-obtain Australian financial services licenses.

• What is debanking and how is Australia addressing it?

  Debanking is when banks deny services to VASPs. Australia aims to better understand and address this issue to ensure VASPs have access to banking services.

• What is Australia’s stance on CBDCs?

  Australia is exploring a wholesale CBDC but sees no clear public interest in a retail CBDC.

• What is Pakistan doing to advance its digital asset sector?

  Pakistan is launching the Pakistan Crypto Council to promote regulatory clarity, a pro-business legal framework, and institutional adoption of digital assets.

• How has President Trump influenced global digital asset policies?

  Trump’s election has pushed governments worldwide to reevaluate their digital asset policies, leading to more positive regulatory environments.

• Why does Pakistan want to regulate digital assets?

  To provide better opportunities for its citizens and attract foreign investment, which has recently declined.