Daniel Mulino (Fraser, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Financial markets are changing. And so is the way people hold and exchange value.

Across the world, digital assets are reshaping finance. Blockchain technology and tokenisation are unlocking new ways to invest, trade and transfer wealth. They promise faster settlement, lower costs, and broader access to markets that were once out of reach. Tokenisation can turn real-world assets like property, commodities or bonds into digital tokens that can be traded instantly and securely.

This is not a distant future. It is happening now. Global institutions are experimenting with tokenised securities, central banks are exploring digital currencies and investors are demanding safe, regulated ways to participate. Digital assets are a growing part of the global financial system. They offer new ways to trade, invest and build businesses, unlocking capital markets and strengthening Australia's competitiveness as a financial centre.

Australia must keep pace. If we get this right, we can attract investment, create jobs and position our financial system as a leader in innovation.

But with opportunity comes risk. It is currently possible for a business to hold an unlimited value of client digital assets without any financial law safeguards. The collapse of FTX and other failures showed what happens when digital asset businesses operate without proper oversight. Billions were misappropriated, consumers were devastated, and confidence was shattered. We also know that cryptocurrency remains a vector for scams and fraud. Australians have lost millions to schemes that exploit gaps in regulation and consumer understanding. These risks cannot be ignored.

This bill responds to those challenges by reducing loopholes and ensuring comparable activities face comparable obligations, tailored to the digital asset ecosystem. It focuses on the potential source of risk—the businesses that hold digital assets on behalf of consumers—rather than the underlying technology itself. This means it can evolve as new forms of tokenisation and digital services emerge.

This bill delivers on the government's commitment to modernise Australia's financial regulatory framework and prepare it for an ever-digitising economy. It ensures digital asset and tokenised custody platforms are subject to the same standards of consumer protection, transparency and integrity that apply across our financial system.

This is about futureproofing Australia's regulatory settings. The bill supports innovation and competition while giving regulators the tools to swiftly act when new risks arise. It extends longstanding, well-understood financial services obligations that can be applied across a diverse and rapidly developing industry.

It is another important step to make the Australian economy more dynamic, resilient and productive. It advances our commitment to smarter regulation—regulation that gets more investment flowing more efficiently and effectively across the economy. It will boost confidence, attract investment and support jobs and wages by providing clear, trusted rules for emerging digital markets—helping to make Australia a global leader in financial technology.

These reforms will increase integrity in the digital asset ecosystem. Together with the world-first Scams Prevention Framework and our proposed reforms of Australia's anti-money-laundering and counterterrorism financing regime, this bill will help remove bad actors and restore trust in digital asset markets. It will make it harder for criminals to operate and easier for consumers to participate safely.

Two new types of financial products will be introduced into the Corporations Act: digital asset platforms and tokenised custody platforms. This ensures that businesses holding and dealing in client digital assets are subject to the same consumer protections and licensing requirements that apply across the financial system.

These include prohibitions on misleading and deceptive conduct and unfair contract terms, design and distribution obligations, and supervision and enforcement by the Australian Securities and Investments Commission.

Anyone providing services in relation to digital asset or tokenised custody platforms—such as advising on, dealing in, or arranging for others to deal in them—will be treated as providing a financial service. They will therefore need to hold an Australian financial services licence, as other financial service providers do. Using the existing licensing framework avoids the need for a new regime, reducing complexity and compliance costs for businesses.

Operators will be required to meet minimum standards set by ASIC covering how client assets are held and how transactions and settlements are conducted. Operators must also provide a platform guide to clients, explaining how the service works, including custody and transfer arrangements, fees and charges, key risks, and client rights. It replaces the need for multiple product disclosure documents and ensures transparency for investors.

The bill also delivers proportionate regulation, providing targeted exemptions to avoid regulatory duplication. Small-scale operators with less than $10 million in transaction value across a rolling 12-month period will be exempt from licensing, as will businesses that deal in or advise on platforms only incidental to their main, non-financial activities.

Flexible powers are provided to the minister and ASIC to respond to emerging risks and technologies. The minister may designate certain facilities as financial markets or clearing and settlement facilities, or exempt them where that treatment would be inappropriate. The minister may also prohibit particular products or activities that present systemic or consumer risks. ASIC's existing product intervention powers and the government's existing regulation-making powers will extend to cover these new financial products.

There will be an 18-month transition period. This will help businesses and ASIC get familiar with navigating the reforms in practice. The bill will ensure a smooth pathway to the new regime, including providing temporary relief for businesses trying to do the right thing.

Together, these features create a pathway to a clear, consistent and enforceable framework that protects consumers, provides regulatory certainty for industry, and maintains flexibility as technology and markets evolve.

As digital assets grow in use and scale, this bill lays the foundation for managing future risks to financial stability. It closes the gap for unregulated digital asset intermediaries and gives Australians the confidence that their assets are protected.

Stakeholders have long called for this bill, engaging in four rounds of public consultation on the policy and legislative approach. The Legislative and Governance Forum for Corporations was consulted in relation to the bill and has approved them as required under the Corporations Agreement. We have listened, improving regulatory clarity and ensuring seamless interaction with existing law.

The government is committed to strengthening Australia's position as a global leader in financial innovation—one where technology supports productivity, competition and long-term economic resilience.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.