Laying the Groundwork: Australia’s Path to Institutional Digital Asset Adoption

Momentum is building in Australia’s digital asset ecosystem, not just among early adopters, but across the institutional landscape. Banks, asset managers, super funds, and regulators are all engaging more seriously, asking what it will take to move from exploration to execution. But unlocking that next phase requires more than interest. It demands infrastructure that meets institutional standards, regulation that provides clarity, and collaboration across the public and private sectors.

In this interview we speak to Zodia Custody’s CEO Julian Sawyer and Managing Director for Australia Ryan Hodges about where things stand, what’s changing, and how Australia could play a defining role in shaping the next chapter of digital finance.

How has sentiment towards digital assets in Australia changed over the past few years and what’s driving it?

Julian: The shift in tone, over the past year particularly, has been significant. At the DECA conference last month, the atmosphere felt notably more optimistic and action-oriented than in previous forums. The conversation has moved beyond the initial regulatory discussions or concerns over scams, and instead now focuses on what’s needed to make real progress.

Ryan: Sentiment towards digital assets in Australia has shifted dramatically over the past few years. What was once viewed with scepticism is now attracting serious attention thanks, in part, to the involvement of global financial heavyweights like BlackRock and Fidelity. While institutions have only recently begun to lean in, retail investors led the way. Self-managed super funds started allocating to crypto as early as 2020, laying the foundation for broader acceptance. Then, in 2024, AMP made headlines by investing $27 million into Bitcoin – becoming the first major superannuation fund to do so – which marked a key turning point for institutional interest.

Today, the momentum is undeniable. With 30% of Australians already invested in crypto and projections reaching 60% by 2030, individuals and corporates alike are reallocating funds into digital assets, not only as a hedge but as a strategic move in an evolving financial landscape. Institutions now have a clear opportunity to lead with confidence, innovate, and help shape the future of finance in Australia.

Julian: At the same time, the regulatory conversation has matured. ASIC and Treasury are engaging more directly with industry, and while we’re not yet in full legislation mode, we are in active consultation – and that’s giving institutions more confidence to plan with intent.

Custody remains one of the more misunderstood areas of the digital asset ecosystem in Australia, especially when it comes to the difference between self-custody and working with a custodian. Why do you think that gap in understanding still exists?

Julian: Part of it comes down to how the market has evolved. Custody has often been framed as a tech decision – where to store your keys, who to trust with the platform – which makes self-custody feel like a viable default, especially for smaller or more crypto-native players.

That view is now starting to shift. Regulation is entering the picture, and with it, the expectation that custody is about more than technology. It’s about legal responsibility, client protection, segregation of duties, and having the right governance in place.

In the US, the term “Qualified Custodian” gives institutions a clear benchmark. You either meet the regulatory bar, or you don’t. That clarity is incredibly valuable. In the UK and Australia those definitions are still being shaped, but that presents an opportunity: to define what good looks like and give the market confidence in who they’re working with.

Ryan: There’s also a legacy perception gap. Traditional custodians are seen as stable, mature, and deeply embedded in the financial system. Digital asset custody is newer, less familiar, and sometimes unfairly viewed as less robust. That’s a gap we can close through education, transparency, and by showing how the same institutional standards apply.

What are the biggest challenges that still need to be addressed before institutions can truly scale their involvement?

Julian: The biggest challenge is having institutional-grade infrastructure that’s supported by regulation, to bring clarity and confidence.

While interest in the ecosystem has grown significantly, large institutions will struggle to engage without the right foundations in place. That means clear legal frameworks, strong operational governance, and risk controls that meet the standards they already apply across traditional finance.

Ryan: And custody sits at the heart of that conversation. In the early stages of digital asset adoption, custody was often framed as a technology decision, but it’s far more nuanced than that. It’s about accountability, control frameworks, compliance integration – to name but a few. Without those elements, most firms simply can’t – and won’t – participate.

Julian: Australia has a real opportunity to get this right as we’re still in consultation mode. The lack of legacy regulation means there’s time to define things properly, including what constitutes regulated custody and who’s qualified to provide it.

Why is Australia such an important market for digital asset adoption?

Julian: Thanks to its compulsory superannuation system, Australia has the fourth-largest pool of investable assets in the world despite being only the 14th largest economy. Even a small allocation to digital assets – just 1 to 3% – would represent tens of billions of dollars in flow.

Ryan: There’s also a cultural openness to innovation. Australians are typically fast adopters of financial technology, whether that’s tap-and-go payments, digital wallets, or online banking. That mindset extends to digital assets and is already visible among both retail investors and self-managed super funds (SMSF).

Julian: Geographically, Australia also has strong links to major regional hubs like Singapore and Hong Kong. That proximity, and the regulatory alignment we’re hoping to see, will matter as global standards continue to develop.

Looking ahead, what are you hoping to see in Australia over the next 12 to 18 months?

Ryan: The most immediate priority is regulatory clarity, especially around custody. If we can get a clear framework in place, institutions will have more confidence in the market and feel they can enter the ecosystem.

We’re already seeing early signals: custody mandates starting to emerge, small-scale tokenisation pilots being discussed, and early treasury use cases being scoped, showing that the market is ready to act.

Julian: In the longer term, the hope is that Australia doesn’t just catch up, it leads. That means coordinated action across regulators, government, and industry. It means defining clear standards, licensing pathways, and enforcement models that are fit for purpose, and avoiding the trap of reactive policymaking.

Australia has the ingredients to get this right: a deep capital base, a tech-forward population, and institutions that want to engage responsibly. If we align those pieces, we won’t just be supporting adoption, we’ll be setting the standard for what institutional digital asset infrastructure can look like globally.