ASIC Revises Guidelines for Digital Assets in Australia
In a significant move for the cryptocurrency landscape in Australia, the Australian Securities and Investments Commission (ASIC) has revised its guidelines pertaining to digital assets and their compliance with existing financial laws. This update, which comes ahead of upcoming legislation from the government, pertains to the definition and classification of digital-asset products under the Corporations Act.
Shift from Crypto-Assets to Digital Assets
The newly released Info Sheet 225 reflects a shift from the previously used term “crypto-assets” to the more encompassing “digital assets.” This change aims to address a broader spectrum of products, encompassing everything from virtual currencies to tokenized assets, thereby eliminating previous exclusions. While the revised guidance does not introduce new legislative requirements, it seeks to enhance clarity for businesses in light of the government’s proposed bills aimed at regulating digital asset platforms and payment service providers.
Key Points on Licensing and Compliance
One of the key points reiterated by ASIC is that many digital assets, including those associated with yield generation, staking initiatives, and certain stablecoins, will necessitate an Australian Financial Services (AFS) license. This reinforces the regulator’s commitment to treating various forms of digital assets under established financial regulations.
The updated guidance expands on prior consultations held by ASIC, increasing its practical examples from 13 to 18. This includes detailed analyses of various asset types, such as gaming NFTs and yield-bearing stablecoins, and evaluates them based on their classification as managed investment schemes, derivatives, or payment facilities.
Regulatory Reach and Custodial Obligations
Crucially, ASIC emphasized that Australian laws extend to offshore and decentralized operations that are marketed within Australia. This means that international platforms cannot evade regulatory scrutiny simply by being based outside the country. Furthermore, new custodial obligations outlined in the guidance will require companies managing client assets to maintain net tangible assets of up to AUD 10 million, with allowances made for incidental custody roles.
Earlier initiatives by ASIC, which granted class relief to intermediaries distributing stablecoins from licensed issuers, also continue to play a role in bridging existing frameworks while the Treasury finalizes its approach to stablecoin regulation. This exemption removes the need for secondary market or clearing licenses for the distribution of such stablecoins, contingent on issuer accountability for compliance.
Future of Digital Asset Legislation
As Australia’s Labor government approaches the finalization of its digital asset legislation, which promises a formal licensing structure for exchanges and custodians, ASIC indicated that its guidance will adapt in conjunction with these reforms. However, it urged industry players to begin aligning with existing regulatory expectations.
In a recognition of the unique market environment, ASIC has included transitional provisions that allow seasoned crypto professionals to qualify as responsible managers under AFS licensing rules, signaling potential leniency for companies actively pursuing approval. Additionally, it has introduced protocols for fund managers and exchange-traded product issuers that cater to retail investors seeking exposure to digital assets, setting new benchmarks for compliance in custody, risk management, and disclosure practices.
Decentralized Finance and Regulatory Collaboration
While ASIC refrains from giving a definitive characterization of “true decentralized finance” (DeFi), it insists that whether participants in such arrangements need licensing will be decided on a case-by-case basis. The agency also noted its role within a wider regulatory collaborative network that includes AUSTRAC, APRA, ATO, ACCC, and the Reserve Bank of Australia, highlighting the complex regulatory environment governing the burgeoning digital asset sector in Australia.
