Australia: 5 frequently asked questions for setting up a cyptocurrency echange in Australia

With digital currencies having cemented themselves in daily finance updates, they have begun to attract the wider market. Due to the returns that have been made in cryptocurrencies, and the regulatory roadblocks in countries outside Australia, it is no surprise that many people are planning on setting up digital currency exchanges in Australia. As a leading law firm in the cryptocurrency and other-digital-currency markets, we receive enquiries daily; whether it's to set up a crypto-education business, crypto-exchange, crypto-fund, or something so novel it doesn't yet have a name (but the owner of the idea does, typically, have a vision board plastered with Lamborghini magazine cut-outs).

Setting up a Crypto Exchange? Given the number of enquiries we receive on this particular question, we thought it best to set out some key points so you can read this first, and then arrange to speak with us. This article addresses the most Frequently Asked Questions we receive about exchange setups, and prepares you for talking to lawyers if you're serious about setting up in the highly regulated Australian jurisdiction.

  1. Do I need an Australian Financial Services Licence?

An Australian Financial Services Licence (AFSL) authorises a business to provide particular financial services in relation to specific financial products to retail or wholesale clients. If your business is based in Australia, or will have Australian customers, you will need to consider whether your exchange will require an AFSL. Whether your exchange business requires an AFSL will depend on how your exchange is structured and what cryptocurrency coins are offered on your site. If your exchange business provides a financial service, or the coins listed are financial products, then you will require an AFSL. We can advise you as to whether your current or proposed operations will require you to acquire an AFSL.

Whilst ASIC has made it clear that Bitcoin is not a financial product ( click here to download ASIC's Submission to the Senate Inquiry), other coins and other features of an exchange business, e.g. payment, FX conversion or stored value component of the platform may mean that you may require a licence.

ASIC has confirmed that some Initial Coin Offerings (ICOs) are financial products.

ASIC also has a handy guide titled Doing Financial Services Business in Australia that is a worthwhile read.

Tip 1: Think about how your proposed exchange will operate by answering the questions below*:

  • What methods of payment can customers use when they buy cryptocurrency, and how are they paid when they sell cryptocurrencies?
  • How do customers deposit and withdraw funds from their own wallet and/or bank account?
  • Will your exchange offer its own customer wallet facility, and if so, how will it work?
  • How are orders matched?
  • What fiat currencies will be used?
  • Where will customers be located?
  • Do you place any restrictions on customer ability to withdraw coins or fiat? If yes, please explain.
  • What customer types will you allow (individual only, etc.)?
  • How does your business source liquidity?
  • If your business will convert fiat currency (including allowing a deposit in one fiat currency and a withdrawal in another foreign currency):
    1. How do you arrange the conversion?
    2. Do you allow fiat withdrawals to non-account holders?
  • What transaction sizes do you allow?
  • Will you hold fiat currency (i.e. a store of value) on behalf of customers?
  • If your exchange will handle ICO tokens, then set out what rights and obligations are attached to those tokens.
  • What other features does your exchange have that have not be set out above?
  • Please provide a flow diagram, showing a step-by-step transaction, including fiat money and coin transaction details, from start to finish. See here for some example diagrams (ref: David Veksler).

* click here to download a PDF checklist of the above questions.

  1. How do the Anti-Money Laundering and Counter-Terrorism Financing Laws apply to my exchange?

The Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Laws impose a number of obligations on most digital currency exchange businesses with a geographical link to Australia. If your business exchanges digital currency for fiat currency (whether Australian or not) or vice versa, you are required to:

  • Register your exchange with AUSTRAC;
  • Implement an effective, risk based AML/CTF Program, that amongst other things, will outline your know your customer (KYC) and ongoing customer due diligence procedures; and
  • Fulfil reporting obligations to AUSTRAC.

We can provide you with advice and training with regard to your obligations, an AML/CTF Program template and assistance tailoring this template to your business and its risks, in addition to assistance registering your exchange with AUSTRAC. In fact, we helped the Australian Digital Commerce Association (ADCA) by overseeing the development of a Code of Conduct for digital currency exchanges. Our AML/CTF template program is bench-marked against that Code. If you're an ADCA member, you get a $500 discount on the cost of our templates.

Tip 2: Start considering your AML/CTF Program a few months prior to your cryptocurrency exchange go-live date. It may take some time to tailor your program, have your procedures technologically implemented, train your staff and register with AUSTRAC.

  1. I have a crypto-to-crypto exchange and do not deal with fiat currency, what does this mean for me?

If your cryptocurrency exchange does not deal with fiat currency and only exchanges one cryptocurrency for another cryptocurrency, you will not be providing the designated service that will bring digital currency exchanges under the Australian AML/CTF Laws.

Tip 3: Although your exchange will not have the obligations imposed on fiat to digital currency exchanges, we recommend you have an AML/CTF Program and consider complying with the ADCA Code (we also recommend compliance with the Code for digital currency exchanges caught by the AML/CTF Laws).

  1. What else do I need to consider?

Your exchange will require Terms and Conditions and a Privacy Policy.

Tip 4: Tip The cost of the Terms and Conditions will depend on the services offered by your cryptocurrency exchange.

Even if your exchange does not offer financial products, you still need to comply with the Australian Consumer Law which prohibits misleading and deceptive conduct.

Tip 5: See ASIC's RG 234: Advertising financial products and services (including credit): Good practice guidance.

  1. What do I do now?

If you still have questions after reading these FAQs, or are setting up a cryptocurrency exchange and need further guidance, we suggest seeking legal assistance. You can contact one of the authors of this article who will be able to assist with your queries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions