Cryptocurrency regulation and
financial crime risk in Australia
Australia has long had a progressive, mostly safe and sensible governance approach to integrating cryptocurrencies into its economy. In this Country Assessment report, we examine this regulatory approach, provide insights on how Australians use crypto assets, assess the financial crime risks to the crypto industry, and discuss how those risks should be addressed.
The crypto asset trading options available to Australians
The friendly regulatory position of the Australian government towards crypto assets means there is an abundance of options for local users. Its network of virtual asset service providers (VASPs) includes local and international crypto exchanges, over the counter (OTC) services, crypto ATMS, peer-to-peer (P2P) exchanges, and eCommerce websites.
Centralized Exchanges
There are 417 crypto exchanges in Australia registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC) as of February 2025.
These include the local Exchanges CoinSpot, BTCMarkets and IndependentReserve, and major international exchanges include Binance, Kraken, and Crypto.com. There are also 5,112 crypto remittance options, which allow cross-border payments using crypto.
OTC Services
Also known as OTC desks, these services are usually used to carry out large purchases or sales which could be cumbersome and uneconomical to make on large exchanges. OTCs can handle the higher volumes and mitigate the risk of price fluctuations by simply charging higher fees to process the transactions.
It’s important to understand that OTC does not equate to an in-person meeting; rather, it functions through multiple channels. OTC desks lack an electronic transaction ledger visible to traders, allowing buyers and sellers to be matched without revealing each party’s identity, which could potentially invite financial crime risks.
Crystal’s research determined that OTC services in Australia are largely conducted online and detected 18 such websites.
P2P Platform trading
P2P platforms let individuals trade directly with each other, without centralized exchanges or brokers interceding, and set their own prices, which can be accepted, rejected, or negotiated. Successful sales are usually paid directly through bank transfers, digital wallets, and even cash.
P2P platforms usually involve smaller amounts than OTC services and are mostly used by retail traders. Unlike OTC services, it is less likely that complete anonymity can be achieved, as addresses can be visible on platforms, some of which insist on an ID verification process.
Crystal identified 14 different P2P platforms buying and selling adverts for BTC, ETH, USDT, & USDC on February 24, 2025, alone.
Crypto ATMs
As of May 6, 2025, there were 1,773 crypto ATMs reported to be in Australia, which makes it the 3rd highest number of them by country in the world. They are mostly installed in major cities like Sydney (631), Melbourne (382), Brisbane (319), Perth (159), and Adelaide (110). Stay up to date at CoinATMRadar.
Social media brokers of crypto assets
Crystal’s investigations revealed several social media-based P2P exchange services with various get-rich-quick scheme adverts scattered among them. Our findings included:
- 18 Facebook groups
- 8 Telegram accounts
- Five Instagram accounts
Crypto asset token usage in Australia
Trading platforms in Australia cater for all the most popular tokens, including BTC, ETH, XRP, TRX, and USDT, as well as many others. Interestingly, Australian authorities are permissive of so-called virtual currency trading pairs, which peg virtual currency value to the Australian dollar.
These include Ethereum-Australian Dollar (ETH/AUD), Tether-Australian Dollar (USDT/AUD), and Bitcoin-Australian Dollar (BTC/AUD). International exchanges follow suit, with major players like Binance offering Ethereum-US Dollar (ETH/USD). Other major fiat currencies linked to tokens include the British Pound (GBP) and the Japanese Yen (JPY).
Crystal’s research identified 31 platforms offering fiat currency support.
How Australians use their crypto assets
Investment and Trading
An estimated 5.6 million Australians used crypto in 2024. This represents about 27% of the population, and usage is predicted to increase to 42% (11.8 million people) in 2025. Australians tend to buy and sell crypto on local and international exchanges as investments and hold crypto as part of long-term diversified portfolios.
Payment and Transactions
The integration of crypto trading into the Australian economy is reflected in how it is acceptable in multiple phases of retail transactions. Crystal’s research indicated this diversity of crypto asset usage when it identified at least four online retailers, real-life retail outlets, and restaurants respectively, and two professional services (a dental surgery and a real estate agency) which accept crypto assets as payment.
Online Gaming
This is popular in Australia and contributes significantly to the global trend of gambling with crypto assets, which increases by an estimated 10% per year. The most popular ones include Jackbit, Flush.com, BC Game, WSM Casino and Bets.io, accepting cryptocurrencies like BTC, ETH, LTC, and USDT.
How Australia regulates crypto assets
In Australia, crypto regulation is run and policed by the Australian Securities and Investments Commission (ASIC), AUSTRAC, and collaterally by the Australian Tax Office (ATO). The latter treats crypto assets as property for tax purposes, with Capital Gains Tax (CGT) rates running at between 0% and 45%.
According to ASIC, all crypto assets must operate under the Corporations Act and ASIC Act. Australian law must be applied for all crypto assets running in Australia, including those operating from offshore. Australian financial services (AFS) licensing is required for all initial coin offerings (ICO).
Entities are required to comply with AML and KYC laws, the Corporations Act, ASIC Act, and Australian Consumer Laws, as well as local laws. Offers on crypto assets or ICOs cannot mislead or deceive potential investors with false information. Identification of a project as a crypto asset or an ICO financial product is essential, and, if successfully done, they must achieve compliance with relevant regulations.
If a crypto business offers financial products, including derivatives or managed investment schemes, it is further required to obtain a Financial Services License (AFSL).
The financial crime risks Australian crypto asset adoption faces
Investment and romance scams
Australia is heavily targeted by crypto-based investment and romance scams. The Australian Cyber Security Centre (ACSC) reported Australian losses of nearly AUD 180 million in the 2023-24 financial year across both crypto and TradFi, with a hike in the number of victims under the age of 50. The scammers duped investors via both fake identities and online platforms showing fake profits. Many of the schemes emanated for the so-called South-east Asian “pig-butchering” compounds.
Crypto-based Ponzi schemes
These scams have impacted tens of thousands of Australians. Examples include:
In 2018, the worldwide crypto Ponzi scheme, Bitconnect, collapsed with the global theft of nearly $2.4 billion, much of which was lost by ordinary Australians. ASIC charged BitConnect’s Australian promoter, John Bigatton, with providing unlicensed financial advice, and he was banned from offering financial services for seven years.
In 2021, an elderly Australian couple who invested their entire superannuation (pension fund) of AUD 900,000 into a crypto Ponzi scheme while on a road trip were wiped out entirely. Among the consequences were the husband being forced to return to work and having to sell a classic vintage car to make ends meet.
In 2022, the Australia-based Hyperverse Ponzi scheme collapsed, costing investors globally about $1.9 billion, including many Australians’ life savings. The supposed metaverse project, also linked to HyperFund and HyperCapital, was founded in Australia by crypto entrepreneurs Sam Lee and Ryan Xu in 2020. It offered investors triple returns within 600 days, and featured a fictitious CEO, “Steve Reece Lewis.” Despite warnings that it was a pyramid scheme, it ran rampant in Australia for two years, finally ceasing all operations in early 2023. The founders and others were charged by both ASIC and US authorities, and Xu remains on the run.
Crypto exchange crashes and rug pulls
These have also cost Australians dearly. Examples include:
In 2021, the local VASP, ACX Exchange, which was founded in 2016, collapsed, costing Australians AUD 50 million. In late 2019, alarm bells sounded when investors found that they couldn’t access their funds on the exchange. It was later discovered that the company mixed investor funds with company funds and used them to invest in other companies and indulge themselves. Tellingly, Sam Lee and Ryan Xu were directors of the company running the exchange Blockchain Global Limited, which in turn collapsed after an AUD 21 million asset freeze.
Also in 2021, MyCryptoWallet crashed inflicting losses on 20,000 Australian investors, who were no doubt enticed by its first-ever offer of a zero-trading fee. Founded in 2017, the collapse followed the freezing of its National Australia Bank (NAB) accounts in 2019 after a dispute. Issues with its tech service providers followed, leaving users unable to access their funds on the exchange. The company was placed into liquidation, with little hope of investors recovering their funds.
Crypto ATM theft and operators’ AML/CFT non-compliance
Australia’s 1,773 crypto ATMs have been targeted by local organized crime groups (OCGs), often along with other goods. An early 2025 Victoria Police operation confiscated six crypto ATMs stolen by an OCG in Melbourne. Additionally, many crypto ATMs in Australia are unregulated, prompting AUSTRAC to set up its crypto task force in September 2024 to ensure and enforce operators’ AML/CFT compliance.
Online gambling with crypto assets
The steady rise in online gambling worldwide has exacted a heavy toll in Australia, where gambling addiction has been highlighted as a growing social harm. As well as this sad reality, gambling’s historical association with money laundering presents risks to both the crypto and traditional finance spaces. Australian casinos have been implicated in money laundering schemes, and in 2023 the gaming and entertainment group Crown Resorts International paid an AUD 450 million fine for repeated AML/CFT violations between 2015 and 2022.
Recommendations for Australia’s crypto asset regulatory framework
Regulatory Vigilance
Australia is heavily targeted by crypto scam groups, with some of the country’s many victims even committing suicide after losing their savings. Authorities should introduce and enforce regulations that ensure compliance and monitoring of crypto platforms to deter illegal activities.
Critically, the AML/CFT regime must better cover financial institutions (FIs). Victims have claimed many shell accounts exist within Australian banks through which their stolen funds were siphoned. FIs have also been accused of neither doing enough to identify those accounts, nor warning customers when large wire transfers leave their accounts. With no fraud victim compensation program among Australian banks if customers authorized the fraudulent transactions in the processing of falling victim to scams, consumer protection gaps should also be looked at.
Public Awareness
With both high numbers of scam victims and crypto users in Australia, authorities should forewarn and forearm the public by undertaking crypto trading and transaction awareness campaigns. AUSTRAC, ASIC, and the ATO’s knowledge base of resources on lists of possible scam sites should also better maintained.
Collaborative Actions
Australian authorities should foster cooperation between regulatory entities, FIs, and law enforcement agencies to quickly identify and deter illegal activities and money laundering which are crypto-related and consolidate their investigations capacity. Since crypto transactions cross international borders and different countries or jurisdictions govern them with varying legislative frameworks, international cooperation and understanding of jurisdictional differences is also vital to counter transnational crime involving crypto assets.
Enhanced Due Diligence (EDD)
Regulators should implement and enforce stricter verification requirements and due diligence procedures by crypto exchanges to combat money laundering, terrorism financing, and other serious financial crimes. It should be re-iterated that in Australia these offenses carry heavy penalties: Money launderers can spend up to 12 years in prison and/or pay fines of up to AUD 100,000. If the amount of laundered funds exceeds AUD 644,400, prison sentences can increase to 25 years, and/or fines of AUD 214,585. Meanwhile fraudsters face a maximum of 10 years in jail and could pay additional fines.
Conclusions on Australia’s crypto asset industry and regulatory framework
Australia is becoming a major crypto asset hub, with accelerating rates of crypto adoption among its population and an astonishing increase in the numbers of crypto ATMs. However, and despite the country’s historically strong crypto regulation framework, AML/CFT gaps have emerged. If Australia can successfully address crypto-related pig butchering scams, Ponzi schemes, exchange failures, crypto ATM theft and operator non-compliance issues, and risks associated with online gambling, the future should be a bright one.
To learn how Crystal can help you transform your approach to crypto regulation, compliance and investigations, get in touch.
