Treasury releases statement on "Developing an Innovative Australian Digital Asset Industry"

The Australian Government has outlined a comprehensive regulatory agenda aimed at supporting the development of a secure, competitive, and innovative digital asset industry. The reforms are designed to manage risks, protect consumers, and align with international standards while enabling industry growth.

The proposed framework includes four primary elements: (1) a licensing regime for Digital Asset Platforms (DAPs) that custody or facilitate trading of digital assets; (2) regulation of payment stablecoins as a form of Stored Value Facility (SVF) under the upcoming Payments Licensing Reforms; (3) a review of the Enhanced Regulatory Sandbox to support innovation; and (4) a series of forward-looking initiatives targeting the broader application of digital asset technologies in financial markets and the economy.

The reforms will extend core financial services laws, including the requirement to hold an Australian Financial Services Licence (AFSL), to specified digital asset service providers. These obligations will include general conduct requirements as well as tailored obligations, such as custody safeguards, redemption rights, and specific disclosure rules for digital asset services. Importantly, the regime will not apply to digital asset issuers or activities that do not involve financial products (e.g. software development or creation of non-financial digital assets), and exemptions will be available for small-scale platforms.

Transition arrangements will be supported by consultation on commencement dates and interim relief mechanisms. ASIC is reviewing Information Sheet 225 to reflect the new regime and provide regulatory clarity. Draft legislation is expected to be released for public consultation in 2025.

The Government has confirmed that dealing in or facilitating secondary trading of certain digital assets, such as stablecoins or wrapped tokens, will not require a financial market licence. In parallel, it continues to address structural challenges such as de-banking, working with stakeholders and major banks to implement recommendations from the Council of Financial Regulators.

Future workstreams include consultation on the Crypto Asset Reporting Framework (CARF) for tax compliance, research on the feasibility of a central bank digital currency (CBDC), trials of tokenised settlements in collaboration with the RBA and ASIC, and ongoing monitoring of decentralised finance (DeFi) regulatory approaches in other jurisdictions.