Australia Cracks Down on Dormant Crypto Exchanges

The Australian Securities and Investments Commission (ASIC) is intensifying its oversight of the cryptocurrency sector, focusing on dormant and non-compliant exchanges.

Overview

There are 427 crypto exchanges registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC). On April 29 2025, the agency stated it believes many of these platforms are no longer active and may be at risk of being acquired and misused by criminal groups. 

This initiative is part of a broader regulatory reform to enhance consumer protection and market integrity within the rapidly evolving digital asset landscape.​ AUSTRAC CEO Brendan Thomas said, “We will be told to use it or lose it.” He added, “Businesses registered with AUSTRAC are required to keep their details up to date; this includes details about services that are no longer provided.” 

Stricter Licensing Requirements for Crypto Platforms

Under the proposed regulations, all crypto exchanges operating in Australia will be mandated to obtain an Australian Financial Services Licence (AFSL). This move seeks to align crypto platforms with traditional financial service providers, ensuring they adhere to established standards of operation. The requirement is expected to impact a significant portion of the industry, particularly smaller exchanges that may struggle to meet the stringent licensing criteria.​

ASIC Commissioner Alan Kirkland emphasised the necessity of these reforms, stating that many widely traded crypto assets are considered financial products under existing laws, thereby necessitating appropriate licensing. The new guidelines aim to provide clarity and enforce compliance across the sector. ​

Industry Response and Potential Implications

The crypto industry has expressed mixed reactions to the impending regulations. While some view the changes as a step toward legitimising the sector, others are concerned about the potential for increased operational costs and the risk of driving innovation offshore. Smaller exchanges, in particular, may face challenges meeting the new compliance requirements, potentially leading to market consolidation.​

Legal experts suggest that while the regulations may not cause a mass exodus of crypto businesses, they will necessitate significant adjustments within the industry. Companies must invest in legal and compliance resources to navigate the new regulatory landscape effectively.

Enforcement Actions Highlight Regulatory Commitment

ASIC’s commitment to enforcing these regulations is evident in recent actions against major crypto exchanges. In April 2023, the commission revoked Binance Australia Derivatives’ AFSL following concerns over client misclassification. Similarly, Kraken’s Australian operator, Bit Trade Pty Ltd, faced legal action for failing to comply with design and distribution obligations, resulting in a substantial fine. 

These enforcement actions underscore ASIC’s determination to uphold regulatory standards within the crypto industry. The commission has indicated that it will continue to monitor and act against non-compliant entities to protect consumers and maintain market integrity.​

As Australia moves toward implementing these comprehensive regulatory reforms, the crypto industry must adapt to a more structured and compliant operational framework. While the changes present challenges, they allow the sector to mature and gain greater legitimacy within the broader financial ecosystem.​