The Australian Securities and Investments Commission on October 22, 2026 signalled a tougher regulatory approach to domestic cryptocurrency trading venues, advancing proposals that would generally prohibit platforms and their related companies from trading as principal against their own customers. The regulator released updated consultation materials and supporting detail on enforcement expectations that expand on Consultation Paper 392, which sets out proposed standards for digital asset platform operators and tokenised custody providers under Australia’s upcoming Digital Assets Framework. The October 22 material clarifies how ASIC plans to treat proprietary trading, affiliated market makers and disclosure obligations while the consultation remains open. ASIC’s core proposal would stop an order matching platform, or a related company, from taking the opposite position to a customer as principal on the same venue. The regulator says the restriction is designed to remove conflicts of interest that can harm consumers, including hidden market making activity and trading that benefits a platform’s own balance sheet at the expense of users. The rule would not outlaw every instance of a business acting as principal. ASIC proposes narrow exceptions for clearly disclosed arrangements, including traditional brokerage models in which a platform acts in a disclosed principal capacity with customer consent, and circumstances where a separate, identified market maker provides liquidity under transparent terms. Capital and custody requirements tightened. Alongside the trading restriction, ASIC also updated the consultation’s proposed financial resources rules. The refreshed text outlines three alternative capital models that would impose differing net tangible asset thresholds on licensed platforms, with a higher banded requirement for operators that custody customer assets directly. The agency flagged that operators relying on third party custodians may qualify for lower capital floors, provided custodial arrangements meet strict eligibility conditions. The consultation also expands on custody controls, requiring platforms to maintain detailed records mapping wallet addresses to customer entitlements, to segregate customer accounts in legal terms where practicable, and to perform independent reconciliation of onchain holdings against internal ledgers. ASIC emphasised that ‘not your keys, not your coins’ is not a legal protection on its own; operators must demonstrate enforceable ownership and reconciliation practices even when assets are held in pooled wallets or with offshore custodians. Why the update matters for Australian users and exchanges. Regulators said the additional detail published on October 22 is intended to reduce uncertainty for businesses preparing to apply for Australian financial services licences under the Corporations Amendment Digital Assets Framework Act 2026, which is scheduled to take effect in April 2027. Existing operators will have a transition window to apply for licences before an October 2027 deadline. Industry groups warn the combined effect of trading constraints, higher capital floors and strict custody tests could raise operating costs, particularly for smaller local exchanges that rely on affiliated market makers. Some regional and niche operators may be pushed to outsource custody, restructure affiliated trading businesses, or scale back product offerings to meet capital and disclosure requirements. Consumer advocates welcomed the clarification. They argued that clearer prohibitions against platforms trading against users, and stronger custody and disclosure obligations, would reduce the types of conflicts and opaque practices that have contributed to past exchange collapses and customer losses in other markets. Next steps. The consultation remains open, with ASIC inviting submissions from market participants and the broader public. Responses to the paper will influence which capital model and which specific carve outs the regulator adopts. ASIC said it intends to publish final instruments and guidance in early 2027, ahead of the Digital Assets Framework’s commencement. For Australian crypto businesses the October 22 update sharpens a choice: restructure to comply with tighter separation between trading and venue operation, bolster capital and custody arrangements, or consider exiting activities that would be incompatible with the final rules. For users, the proposals aim to deliver clearer protections and greater transparency in how exchanges operate, but they are likely to reshape the domestic exchange landscape before the licensing regime fully begins.