Tom French (Moore, Australian Labor Party) Share this | Hansard source

I rise to support the Corporations Amendment (Digital Assets Framework) Bill 2025. This is a significant piece of legislation. It's not flashy and it doesn't chase headlines, but it does something far more important. It brings clarity, accountability and confidence to a part of our economy that has grown rapidly, often noisily and, until now, too often without the protections Australians rightly expect.

Digital assets are no longer a fringe interest. They are not the preserve of early adopters, hobbyists or speculative traders operating on the margins of the financial system. Digital assets and the platforms that support them are now firmly embedded in the global economy. Australians are using them to invest, to transact, to build businesses and to experiment with new models of value creation. With that growth comes opportunity. Blockchain technology and tokenisation have the potential to reduce transaction costs, speed up settlement, expand access to capital markets and enable new forms of innovation across the economy.

If Australia gets this right, we can be a serious player in the digital economy. But with opportunity comes risk, and for too long those risks have fallen disproportionately on consumers. We do not need to speculate about what happens when fast-growing financial activity is allowed to operate without clear rules; we've already seen it. Consumers have experienced frozen withdrawals, lost access to assets they believed were held in trust and discovered, often too late, that their assets were co-mingled or inadequately protected. In some cases, digital asset platforms failed not because of market volatility but because of basic governance failures that would not be tolerated anywhere else in the financial system.

These events have had real consequences for people. Australians have lost savings set aside for first homes, retirement or small business investment. Confidence has been shaken not only in individual platforms but in the broader promise of digital finance itself. That erosion of trust does not hurt just consumers; it hurts legitimate Australian businesses that are trying to innovate responsibly and to compete globally.

The absence of clear standards has allowed poor practices to persist and bad actors to hide in plain sight. This bill is a direct response to those failures. It recognises that, while technology evolves quickly, the fundamentals of consumer protection do not. Australians should not face a lower standard of care simply because an asset is digital rather than physical. This bill addresses those problems directly.

Australia's existing financial service laws were never designed to deal comprehensively with large-scale custodial holdings of non-financial digital assets. While parts of the current framework apply in some circumstances, significant gaps remain. In practice, this has meant that businesses could hold large volumes of client digital assets without licensing, custody or disclosure obligations that would apply in more traditional financial arrangements. That gap has created uncertainty for regulators and confusion for consumers, and risk for the system as a whole is encouraged—a form of regulation-by-enforcement where businesses only discover they are compliant after legal action has commenced. This bill replaces ambiguity with clarity by making it clear which activities are captured, which obligations apply and where responsibility lies.

The bill introduces two new categories of financial products into our existing framework: digital asset platforms and tokenised custody platforms. By doing so, it ensures businesses performing functions that look and feel like traditional financial services are subject to comparable obligations tailored to reflect the unique features of digital assets. This is the principle of 'same activity, same risk, same regulation' in action.

Under the bill, operators of digital asset platforms and tokenised custody platforms will be required to hold an Australian financial services licence unless a targeted exemption applies. Requiring an Australian financial services licence is not a punishment; it is a signal of legitimacy. It ensures operators meet baseline standards of competence, financial capacity and governance. It means they are accountable to ASIC and that consumers have clear avenues for redress. ASIC's supervisory and enforcement role under this framework is not about micromanaging innovation; it is about ensuring minimum standards are set, risks are managed responsibly and consumer assets are handled with the care Australians expect elsewhere in the financial system.

In addition, the bill introduces specific, bespoke obligations designed to address real-world risks that have emerged in digital asset markets. These include minimum standards for asset holding, requirements around transaction and settlement, and tailored disclosures to help consumers understand how platforms operate and the risks that are involved. Importantly, these disclosures are not about burying consumers in technical jargon or dense legal documents. The bill replaces the need for multiple product disclosure statements with a clear, platform-specific guide. This is about transparency that is meaningful, not performative.

I want to address directly a concern that is sometimes raised in debates like this: that regulation will stifle innovation. A well-designed regulatory framework is not the enemy of innovation; it is its foundation. Businesses invest where the rules are clear, stable and predictable. Capital flows to jurisdictions that combine openness to new ideas with confidence in the rule of law. By providing regulatory certainty, this bill supports productivity growth across the economy. Tokenisation and digital infrastructure have the potential to reduce costs, speed up settlement and unlock new forms of economic activity, but only where trust in the system exists. This is how Australia positions itself as a serious and competitive digital economy, open to innovation but clear eyed about the risk.

This bill provides regulatory certainty. It tells businesses what is expected of them, tells investors and consumers what protections they can rely on, and gives regulators the tools they need to intervene early rather than cleaning up the wreckage after the harm has occurred. That certainty is not a barrier to innovation; it is a precondition for it. The framework recognises the importance of startups and small operators in driving innovation. Exemptions for genuinely small and lower-risk providers ensure that early-stage businesses are not burdened with obligations that are disproportionate to the risks they pose. Rather than attempting to define every possible digital asset—a task that would be obsolete almost as soon as it was completed—the bill takes a more sensible, future focused approach. It targets the source of the greatest risk the platforms and the custodial arrangements that hold digital assets on behalf of consumers. Under this framework, those platforms will be subject to the general obligations that underpin trust in our financial system, including obligations to act efficiently, honestly and fairly, as well as prohibitions on misleading conduct and oversight by ASIC.

The bill demonstrates a strong commitment to proportionality. It includes exemptions for genuinely small operators, including a low-value threshold that ensures startups and early-stage innovators are not crushed under compliance costs before they have a chance to scale. It also provides an exemption to businesses where digital asset services are incidental to a broader non-financial activity. These are sensible carve-outs. They recognise that innovation often begins small and that regulation should be targeted when the risk is greatest.

This bill further includes an 18-month transition period. This is not an afterthought. It is an acknowledgement that both industry and regulators need time to adapt. Businesses that are trying to do the right thing will have a clear pathway into compliance, and ASIC will have the opportunity to engage constructively with the sector as the regime comes into force. This legislation does not exist in isolation. It sits alongside other reforms to strengthen the integrity of our financial system and protect Australians from harm, including reforms to our anti-money-laundering and counterterrorism financing regime, as broader efforts to combat scams and financial crime.

Digital assets have increasingly been used by criminals to obscure transactions, move funds across borders and exploit regulatory blind spots. This bill closes one of those blind spots. Bringing digital asset intermediaries within the financial services framework makes it harder for bad actors to operate and easier for law-abiding businesses to distinguish themselves. I also want to acknowledge the extensive consultation that underpins this bill. This framework did not happen overnight. It is the product of multiple rounds of public consultation, of engagement with industry, legal experts and consumer advocates and of careful consideration of international developments.

The government has listened. It has refined its approach, and it has delivered legislation that aligns Australia with comparable jurisdictions while remaining grounded in its own legal and regulatory traditions. We are already seeing what responsible digital innovation looks like when talent, investment and clear rules come together. Western Australia has become an international epicentre for cybersecurity experts, businesses and leaders, with Perth emerging as a nationally significant hub for cybercapability and innovation. A major reason for that strength is the depth of skills and training being developed in Perth's north.

Edith Cowan University, based in my electorate of Moore, is the second largest cybersecurity training facility in the Southern Hemisphere and was the first Australian institution admitted to the International Cyber Security Center of Excellence following its establishment in 2019. ECU alone produces more than 20 per cent of Australia's cybersecurity graduates, contributing to the more than 66,000 cyberworkers now employed nationally. It's a workforce that continues to grow rapidly.

In my electorate of Moore, this growth is not abstract. Local businesses, startups and skilled workers are contributing to this ecosystem by developing secure platforms, compliance technologies and digital services that rely on strong regulatory foundations. This includes local cybersecurity firms, such as Simformatica, which is led by Peter Stagg, who is a local business owner with whom I have met to discuss the opportunities and challenges facing the sector.

I had the pleasure of attending the Joondalup Business Association's breakfast in August last year, alongside the Minister for Small Business the Hon. Dr Anne Aly, where I heard from local business leaders about the strengths and ambitions of our region's innovators. Those ambitions depend on certainty, integrity and clear rules, and from a constituency perspective this matters deeply. In communities like mine, people are curious about new technologies, but they are also cautious. They want to know that if they engage with digital assets—whether directly, through investment products or via emerging local businesses—the rules are clear and the protections are real. This bill gives them that confidence.

Looking ahead, the growing scale and interconnectedness of digital asset markets means that risks which are currently contained could, if left unmanaged, become systemic. Large custodial failures, operational outages or cyber incidents have the potential to spill over into the broader financial system. This bill lays the groundwork for managing those risks before they crystallise rather than reacting after the damage is done. It also supports Australian innovation. Clear rules attract investment. They support job creation in fintech, cybersecurity, compliance, software development and advanced manufacturing. They position Australia as a jurisdiction that is open to new ideas, but isn't naive about the risk.

The question before the House is not whether digital assets will continue to grow. They will. The question is whether we allow that growth to occur in a regulatory vacuum or whether we put in place a framework that protects consumers, supports responsible innovation and safeguards the integrity of our financial system. This bill chooses the latter. It modernises our law without discarding what works, it adapts existing financial services principles to new technology, and it strikes a careful balance between flexibility and accountability. For those reasons, I commend the bill to the House.

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