Gemini Strengthens Australian Presence Ahead of Formalized Crypto Regulation

Executive Summary

Gemini, a global cryptocurrency exchange, has solidified its operational footprint in Australia by registering its local entity, Gemini Intergalactic Australia, Pty Ltd, with the Australian Transaction Reports and Analysis Centre (AUSTRAC). This registration enables direct Australian dollar (AUD) trading capabilities through local banking integrations such as NPP and PayID. Concurrently, Gemini is pursuing an Australian Financial Services Licence (AFSL) from ASIC, aligning its operations with Australia's forthcoming comprehensive regulatory framework for digital assets. These actions precede the implementation of draft legislation designed to bring cryptocurrency exchanges under the purview of the Corporations Act, signaling a strategic move by Gemini to comply with and operate within a formally regulated market environment.

The Event in Detail

Gemini Intergalactic Australia, Pty Ltd, has completed its registration with AUSTRAC, Australia’s financial intelligence and anti-money laundering regulator, a mandatory step for offering crypto exchange services within the country. This registration facilitates the provision of direct AUD trading for Australian users, eliminating the need for cross-border transfers to U.S. accounts. Gemini has also appointed James Logan as Head of Australia to lead local strategy.

The expansion comes as the Australian government prepares to enact new legislation aimed at regulating cryptocurrency exchanges. A draft law, introduced last month, seeks to extend financial services oversight to crypto firms, mandating that they hold licenses under the Corporations Act. This framework will grant ASIC direct oversight of exchanges, custody providers, and tokenized financial products. The legislation categorizes "Digital Asset Platforms" and "Tokenised Custody Platforms" as new financial products, subjecting them to comprehensive regulatory requirements. Assistant Treasurer Daniel Mulino unveiled this draft legislation, marking a significant shift for Australia's crypto sector.

The new regulations outline core obligations for crypto companies, including stringent requirements for governance and risk management, minimum capital reserves, client asset segregation, and robust cybersecurity frameworks. Operational standards will encompass transparent transaction settlement rules, conflict of interest management, dispute resolution processes, and independent auditing. Consumer protections, such as insurance or compensation schemes, are also mandated. Notably, the legislation specifically addresses stablecoins, requiring 1:1 collateral backing and strict transparency, while exempting non-fungible tokens (NFTs) and tokens used in gaming ecosystems. Smaller exchanges, defined as those with under AU$6.5 million in yearly trading or less than AU$3,300 in average customer deposits, may be exempt from certain fines.

Market Implications

Gemini's proactive stance in embracing Australia's stricter regulatory environment suggests a trend towards greater institutional and corporate engagement with compliant digital asset platforms. The introduction of clear regulatory guidelines, including the requirement for AFSLs and oversight by ASIC, aims to foster increased investor confidence and could attract broader adoption of digital assets within Australia.

This regulatory framework may lead to a consolidation within the Australian crypto market, as smaller entities unable to meet the new compliance burdens might struggle, benefiting larger, well-resourced exchanges like Gemini. The standardized operational and consumer protection requirements are intended to mitigate risks associated with volatility, hacks, and fraud, contributing to a more mature market ecosystem. By integrating crypto into established financial law, Australia positions itself as a potential Asia-Pacific crypto hub, competing with regions like Singapore, Hong Kong, and Dubai, which have also developed clear regulatory postures.

Expert Commentary

Saad Ahmed, Head of APAC at Gemini, commented on the expansion, stating, "Our decision to expand into Australia has been in motion for some time. While we welcome the government’s efforts to strengthen oversight of the sector and remain committed to full compliance, our focus on Australia stems from its strong market potential." He emphasized Gemini's mission to build a secure, trusted ecosystem for both retail and institutional users. The Australian government has expressed its commitment to supporting innovation while making digital assets safer for consumers, noting that "Stakeholders support the policy case for government regulating digital asset platforms."

Broader Context

For years, the Australian crypto sector has operated within a regulatory "grey zone," with exchanges primarily required to register with AUSTRAC for anti-money laundering and counter-terrorism financing purposes. The new draft legislation represents a significant departure from this, extending the existing Corporations Act to cover digital asset activities rather than creating an entirely new bespoke regime. This approach aligns Australia with global frameworks that integrate cryptocurrencies into traditional financial law, mirroring strategies seen in jurisdictions like Singapore. The clarity provided by this framework offers a more predictable environment for blockchain innovators, exchanges, and startups, addressing previous uncertainties and de-banking issues, and potentially attracting investment from offshore jurisdictions seeking regulatory certainty. This initiative aims to establish effective settings for digital assets and payment stablecoins, bolstering consumer and investor protection.