Australia Drafts Custody Rules for Crypto Exchanges

Australia's corporate regulator, the Australian Securities and Investments Commission (ASIC), has released draft rules that could require cryptocurrency exchanges to maintain a minimum of A$14 million (approximately $9 million USD) in net assets. These proposed regulations, aimed at enhancing the security of customer funds, would apply to platforms that hold digital assets on behalf of clients or engage in proprietary trading against users. The rules are scheduled to take effect on April 8, 2027.

The consultation paper, released on October 15, allows for public feedback until November 27. The move follows a series of high-profile failures in the crypto industry, such as FTX, which highlighted the risks associated with the custody of digital assets. Until these rules are finalized and implemented, the onus remains on individual investors to verify the security practices of the exchanges they use.

In parallel, a new cryptocurrency project named Pepeto is introducing a decentralized solution to bypass such custody requirements. Pepeto's presale has reportedly raised over $11.2 million. The project features a "bridge" that allows users to transfer and trade cryptocurrencies directly from their own wallets, eliminating the need for a third-party custodian. This approach sidesteps the regulatory capital requirements proposed by ASIC.

The Pepeto team includes the founder of the original Pepe coin and a former Binance expert. The project offers a 0% fee for its cross-chain bridge and decentralized exchange. It is anticipated to list on Binance soon, with analysts projecting significant growth potential.