Australia’s securities regulator opened consultation on Thursday on proposed capital, custody and trading requirements for crypto platforms, as it prepares to implement legislation passed in April that expands oversight of the industry.

The Australian Securities and Investments Commission (ASIC) is seeking feedback on Consultation Paper 392, which sets out three alternative capital models, restrictions on platforms trading for their own account, and quarterly reporting of wallets holding customer assets. The regulator also proposes allowing offshore custody while seeking feedback on safeguards should an overseas parent or related company fail. Together, the proposals would define how platforms protect customer assets, manage conflicts of interest and demonstrate financial capacity before the new licensing regime takes effect.

“Our proposed guidance and standards acknowledge the increasing role of digital assets and tokenization, including in traditional parts of the financial system,” said ASIC Commissioner Alan Kirkland.

Under the new framework, the proposed guidance and standards would give crypto operators greater clarity on what is required to obtain a license, safeguard customer assets and meet financial requirements. The consultation follows Parliament’s passage of the Corporations Amendment (Digital Assets Framework) Act earlier this year.

“ASIC’s release of CP 392 is an important milestone for Australia’s digital asset industry,” Amy-Rose Goodey, CEO of the Digital Economy Council of Australia, told Cointelegraph. “After years of engagement on regulatory reform, it’s encouraging to see the focus shift towards practical implementation.”

OKX Australia CEO Shane Chandra also welcomed the proposals, saying they could drive industry consolidation.

“These standards are appropriately onerous,” he told Cointelegraph. “They will reward operators who have already invested in compliance, capital and custody. They will challenge operators who have waited to make that investment.”

Capital, custody and trading rules in focus

ASIC is weighing three alternative capital models, including one that would require operators without qualifying third-party custody arrangements to hold at least 14 million Australian dollars ($9.7 million) in net tangible assets, or 10% of average revenue, whichever is greater.

“We’ll be working closely with our members to examine the three proposed capital models in considerable detail, particularly their proportionality across businesses of different sizes and the concessions available for third-party custody,” Goodey said.

Steven Pettigrove, a partner at law firm Piper Alderman, said the proposed financial requirements would favor scale and established custody providers.

“The proposed NTA requirements for DAPs will encourage scale and established custodians,” Pettigrove told Cointelegraph.

“From our perspective, it is not at all contentious that this level of resourcing and care should be taken when clients entrust you with their assets,” Chandra said.

The regulator has also proposed permitting offshore custody, while seeking feedback on whether Australian operators should have emergency access to private keys if the overseas parent or related company fails.

“The proposal not to mandate domestic custody is also significant, recognizing the global nature of digital asset markets,” Goodey said.

Operators would also have to report custody wallet structures and addresses to ASIC quarterly and retain relevant records for seven years. Liam Hennessy, a partner at law firm Thomsons, said the reporting proposal partly reflected the Australian market’s reliance on offshore infrastructure, as global competition means digital assets are usually held offshore.

ASIC additionally proposes restrictions on platforms trading for their own account and accepting benefits to favor particular tokens, targeting potential conflicts of interest. Hennessy said the measures could test existing trading models.

“Under ASIC’s proposal, an order matching DAP (one that brings client orders together, by order book or by matched principal trading) could not trade as principal on its own platform, and its related bodies corporate could not trade as principal through it,” he said. “There are model-specific exceptions. Groups that rely on an affiliated market maker should look at this first.”

Implementation timeline

The consultation forms part of ASIC’s 18-month implementation roadmap, published after the Digital Assets Framework Act was passed in April. The consultation and transition period give operators a defined sequence for reviewing the proposed standards, preparing license applications and addressing capital, custody and reporting requirements.

Feedback is due Nov. 27, with ASIC aiming to publish final standards and guidance in March 2027. The law is set to take effect on April 8, 2027, and operators will have until Oct. 7, 2027, to apply for the relevant license and may continue operating while ASIC assesses their applications.