Introductory Info
Date of introduction: 26 November 2025
House introduced in: House of Representatives
Portfolio: Treasury
Commencement: 12 months after Royal Assent.
Purpose of the Bill
The purpose of the Corporations Amendment (Digital Assets Framework) Bill 2025 (the Bill) is to amend the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001 (ASIC Act) to implement a regulatory framework for businesses that hold or manage digital assets on behalf of consumers. The Bill aims to close regulatory gaps, improve consumer protection, and ensure businesses holding digital assets meet standards like those in the broader financial system.
Background
Explanation of ‘digital asset’ and other key terms
According to Thomson Reuters, a digital asset is: ‘Any of a broad category of assets that are issued and transferred using blockchain technology, including cryptocurrency, virtual currency, stablecoins, digital coins and tokens, such as security tokens, utility tokens, and governance tokens, as well as non-fungible tokens (NFTs)’. A digital asset is ‘[a]lso sometimes referred to as a crypto asset or virtual asset’. Other definitions are similar.
Digital assets are a rapidly growing part of the Australian and world economy. According to the Tech Council of Australia (2022), supporting a responsible digital asset sector could add up to $60 billion per year to gross domestic product (GDP) by 2030 (p. 4), reduce retail payment costs by 80% by 2050 (p. 28), and save consumers $4 billion annually on international transaction fees (p. 49).
A blockchain is a decentralised, distributed public digital ledger that records transactions across many computers, making it resistant to tampering because changes require network consensus and alteration of all subsequent blocks.
Tokenisation is the process of replacing a sensitive asset with a token (a unique and nonsensitive string of symbols randomly generated by an algorithm). According to the Bank for International Settlements (BIS), it involves generating and recording a digital representation of assets on a programmable platform (pp. 6–7).
Cryptocurrencies (crypto) and stablecoins are types of digital currency that allow people to make payments directly to each other through an online system. Stablecoin prices are linked to other crypto assets, fiat currencies or commodities (p. 43). They can be used for investments and domestic and international payments.
However, crypto is not money, partly due to its volatility. According to the Reserve Bank of Australia (RBA):
Cryptocurrencies have no legislated or intrinsic value; they are simply worth what people are willing to pay for them in the market. This is in contrast to national currencies, which get part of their value from being legislated as legal tender.
NFTs are tokens used to represent ownership of unique items in the digital or real world, like art, collectibles, or even real estate (p. 10). They can also be used for proving identity and granting access (to either a virtual or physical space, p. 10).
The global regulatory landscape for stablecoins and other cryptoassets is rapidly evolving (p. 14). Jurisdictions have intensified regulatory efforts to help preserve and promote the safety, efficiency and integrity of the monetary and financial system. At the end of 2024, more than 2 out of 3 jurisdictions worldwide currently, or would soon, regulate stablecoins and other cryptoassets (p. 14).
In Australia, the main regulator of digital assets has been the Australian Transaction Reports and Analysis Centre (AUSTRAC) under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, but regulatory responsibility is shared across a number of regulators (including ASIC). According to law firm K&L Gates on 24 November 2025:
The Australian framework for regulating digital assets has, up until the introduction of the Bill, been relatively fragmented. The position from the Australian Securities and Investment Commission (ASIC) is outlined in Information Sheet 225 (which is also under review). According to ASIC, the existing financial services regime applies in determining whether a crypto-asset is a financial product or not.
For example, a digital asset, if it has the relevant features, may amount to a managed investment scheme or security. As such, the exercise of determining whether a particular token is a financial product is an issue that has been at the forefront of the digital asset space.
There have been a number of pieces of litigation in this space, where ASIC has prosecuted token issuers for issuing what it alleges to be financial products. The outcomes of these cases have been varied and have only provided limited clarity. The crypto industry in Australia more broadly has decried the use of an apparent regulation by enforcement approach as not being a fair or efficient method of clarifying these issues.
Globally, fragmented regulation has increased compliance costs, created market entry barriers, and potentially inhibited investment and innovation. The fragmentation of regulation means that businesses struggle to determine which obligations apply and there may be gaps in consumer protection. In Australia, businesses can currently hold unlimited client digital assets without financial law safeguards.
Cryptocurrencies have an important anti-money laundering and counter-terrorism financing (AML/CTF) dimension. According to the BIS (p. 1):
Cryptoassets circulating on permissionless public blockchains have grown in heft rapidly and are becoming increasingly integrated with the mainstream financial system … Since 2022, stablecoins have overtaken bitcoin as the asset of choice among criminals using crypto, and as of 2024 accounted for approximately 63% of all illicit transactions.
The history of digital assets and their regulation in Australia
Launched in January 2009, Bitcoin was the first decentralised convertible digital currency and the first cryptocurrency.
In 2014, the Australian Taxation Office (ATO) issued Taxation Determination TD 2014/26 which classified cryptocurrencies as property (rather than money or foreign currency), subjecting them to capital gains tax (CGT).
Australia lacks a dedicated legal framework for digital assets; they are governed under existing financial services laws. The question of whether a digital asset constitutes a financial product, and the attendant licensing obligations requires complex legal analysis (pp. 323–4).
In September 2017, ASIC issued its official guidance on how financial services laws apply to digital assets (Information Sheet 225 (INFO 225)) with updates in 2018, 2019 and 2021. It was most recently updated in October 2025 after industry consultation. INFO 225 provides examples that indicate whether a digital asset or related product is likely – or unlikely – to be a financial product and, if so, which type of financial product. INFO 225 also states that:
In December 2017, the then Coalition Government amended the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) to require digital currency exchanges to register with AUSTRAC, introducing know-your-customer (KYC) and reporting obligations.
In 2021, the interim and final reports of the Senate Select Committee on Australia as a Technology and Financial Centre, chaired by Liberal Senator Andrew Bragg, highlighted regulatory gaps. It recommended (in Final Report Chapter 3 and Recommendations 1–4) moving beyond AUSTRAC’s ’light-touch’ regulation of digital currency exchanges (para 3.26) to a comprehensive framework for digital assets.
In March 2022, Treasury released the Crypto Asset Secondary Service Providers: Licensing and Custody Requirements: Consultation Paper. Treasury received 110 submissions, including 11 confidential submissions. The paper proposed three different regulatory options (pp. 16–19), with many stakeholders indicating that leveraging the existing financial services laws was the most appropriate avenue (Explanatory Memorandum (EM), p. 4).
In May 2022, the Terra network, which issued the Luna cryptocurrency, collapsed. According to the BIS, the market volatility that followed caused losses worldwide of over $450 billion (p. 1). BIS also notes that similar market volatility after the FTX cryptocurrency exchange collapsed in November 2022 caused global losses of around $200 billion (p. 1). An estimated 30,000 Australian investors were affected. Lack of oversight may have contributed to these collapses.
In February 2023, Treasury released the Token Mapping: Consultation Paper. 91 submissions were received for this consultation, including 8 confidential submissions. Treasury identified potential gaps under the existing regime but recommended against a new ‘bespoke’ taxonomy for crypto assets (paras 49–52, p. 18). Many stakeholders agreed with this recommendation (EM, p. 4).
In October 2023, Treasury released the Regulating Digital Asset Platforms: Proposal Paper. Consultation was from 16 October to 1 December 2023. There were 72 published responses. The paper introduced the idea of a new type of financial product called a ‘digital asset facility’ (which had broad stakeholder support) (EM, p. 5).
In the 2024–25 Budget (Budget Paper No. 2, p. 182), the Government undertook to develop and consult on legislation to licence and regulate platforms that hold digital assets.
In June 2025, the Full Federal Court handed down its decision in ASIC v Web3 Ventures Pty Ltd [2025] FCAFC 58 (Block Earner), finding that a crypto product was not a ‘financial product’ for the purposes of the Corporations Act, because it was neither a managed investment scheme, nor a derivative, nor a facility by which a person made a financial investment. In September 2025 the High Court granted ASIC special leave to appeal Block Earner.
In July 2025 the Full Federal Court handed down its decision in ASIC v Wallet Ventures Pty Ltd [2025] FCAFC 93, dismissing ASIC’s appeal against the 2024 decision of the Federal Court that found that a crypto product, Finder Earn, was not a debenture and therefore a financial product requiring an AFSL.
Following those decisions, in September 2025, the Government released exposure draft legislation, the Treasury Laws Amendment Bill 2025: Digital Asset, and Tokenised Custody, Platforms. The consultation occurred in September–October 2025. Treasury is yet to publish the submissions it received.
Policy position of non-government parties/independents
Senator Andrew Bragg released 2 successive private senators’ Bills aimed at regulating digital assets in Australia. These were the Digital Assets (Market Regulation) Bill 2022 and the Digital Assets (Market Regulation) Bill 2023, the latter of which was introduced and reported on by the Senate Economics Legislation Committee (the Bill lapsed at the end of the 47th Parliament). In April 2025, the then Shadow Treasurer, Angus Taylor, promised (if elected) to introduce digital asset regulation within 100 days of the election (p. 12).
The Opposition, other non-government parties and independents do not appear to have yet stated a policy position on the Bill.
Key issues and provisions
Several stakeholders, including the Australian Banking Association, the Australian Custodial Services Association (ACSA), the Australian Financial Markets Association (AFMA), Blockchain Australia, the Digital Economy Council of Australia (DECA), the Financial Services Council, KPMG, the Law Council of Australia (LCA), and the registered crypto exchange Swyftx were supportive of the general approach proposed in the Exposure Draft and/or 2023 Treasury Proposal paper, while providing detailed comments on the measure. In contrast, the Australian Bitcoin Industry Body (ABIB) was opposed to the approach.
AFMA stated in relation to the Exposure Draft:
AFMA supports the general approach of continuing the application of financial services law unless expressly exempted by the legislation … We also support the regime’s regulatory neutrality and agree with the underlying view that ‘same risk, same regulation’ is appropriate given the same risks are present in different forms in schemes implemented with different technologies. We also support the technological neutral approach which is silent on the underlying technology and seeks instead to work from the basis of legal rights. (pp. 1–2)
In relation to the Exposure Draft law firm Allens pointed out:
The new regime will not change the characterisation of whether the underlying digital assets or tokens are themselves financial products, or the obligations of issuers or those providing other services in relation to digital assets or tokens (other than the provision of digital asset platforms or tokenised custody platforms). The existing regime and ASIC's current guidance on these matters will continue to be relevant.
Meaning of ‘digital token’
The Bill adopts the term ‘digital token’ which is defined in item 1, proposed subsection 761GB of the Corporations Act as:
- an electronic record that one or more persons are capable of factually controlling or
- an electronic record prescribed by regulations.
DECA commented:
… the Draft Bill adopts the term “digital token” across sections 761GB to 761GD, while AUSTRAC uses “virtual asset” as a globally recognised term. This divergence risks confusion when applying AML/CTF reporting obligations and the Travel Rule, and causes misalignment between Treasury, AUSTRAC and international partners. It also causes unnecessary legal complexity in an already complex legal framework. There is strong precedent for AML/CTF laws and Corporations Act laws to be consistent … (p. 8)
ACSA argued that ‘digital token’ was broad and potentially duplicative. It asked:
Specifically, how will overlapping or conflicting obligations be managed when assets traditionally regulated under other regimes (e.g., cash, securities) are held or transacted via digital tokens? How will the regime address situations where a digital token is representation of an existing regulated product (e.g., tokenised government bonds, tokenised deposits)? (pp. 1–2)
Meaning of ‘control’ and ‘factual control’
AFMA raised the meaning of ‘control’ and ‘factual control’ (as opposed to legal control) of a digital token (item 1, proposed subsection 761GB(2)). That provision states:
A person is capable of factually controlling an electronic record if the person can (whether alone or jointly with one or more other persons):
(a) transfer the electronic record; and
(b) exclude one or more other persons from transferring the electronic record; and
(c) demonstrate that the person can do the things in paragraphs (a) and (b).
Note: A person who can do all of these things possesses the digital token (see paragraph 86(2)(a)).
The Explanatory Memorandum (EM) (pp. 22–23) clarifies the meaning of joint possession as covered by item 30, proposed paragraph 86(2)(a) and subsection 86(3), stating that where 2 or more people are concurrently capable of factually controlling the same digital token but the degree of control they have is unequal, the person who (for example) requires the consent of the other to transfer the token does not possess the token.
AFMA suggested that: ‘Control might apply in ways that are likely not intended to be captured such as where a provider of systems or storage to a digital asset inadvertently has the ability to exclude others including the owner of the asset.’ It also suggested that ‘factual control might be better framed as factual control in accordance with the law’ (p. 3). DECA argued the term ‘control’ should be refined to mean actual unilateral authority to move assets—not joint or technical control (p. 9). While the term ‘factual control’ appears uncommon in the law, the concept of ‘effective control’ is used in taxation and criminal law (proceeds of crime) contexts.
Proposed paragraph 761GB(1) allows the regulations to prescribe that an electronic record is or is not a digital token. This provision gives the Government flexibility to expand or narrow the scope of what is regulated without parliamentary amendment (although any regulation would be subject to parliamentary scrutiny and disallowance), which could significantly affect industry obligations.
Meaning of ‘digital asset platform’ and ‘tokenised customer platform’
According to paragraph 1.78 of the EM a digital asset platform (DAP) is a facility under which the operation:
- possesses digital tokens and
- records clients’ interests in an account (item 1, proposed section 761GC).
According to paragraph 1.78 of the EM, a tokenised custody platform (TCP) holds assets or possesses digital tokens, and records clients’ interests as digital tokens. Paragraph 1.91 of the EM clarifies a digital token is issued for each underlying asset and:
- possession of the digital token gives the holder a right to redeem or direct delivery of that asset and
- the TCP holds the asset for, or must deal with it on the instructions of, the digital token holder ‘as a trustee or bailee’ (item 1, proposed section 761GD).
The difference between the two is that a DAP generally manages existing digital tokens, while a TCP specifically creates tokens that represent a right to redeem a linked, underlying real‑world asset (like gold or shares) held by the platform, acting as both issuer and custodian.
In commenting on the Exposure Draft Bill, the LCA (at para 6) and DECA (pp. 11–12) criticised the definition of a DAP and a TCP as holding digital tokens on trust. The LCA said:
As is well known, many centralised cryptocurrency exchange (CEx) platform operators do not promise to hold digital tokens on trust for, or on behalf of their users; rather digital tokens are owned by the platform operator and the user merely obtains a chose in action [an intangible personal property right] representing their right to have equivalent tokens reconveyed upon demand, the value and denomination of the chose in action fluctuating according to account balances.
This issue appears to have been addressed in the Bill. Item 1, proposed paragraphs 761GC(1)(b) and 761GD(1)(d) now relevantly read:
the underlying assets are so possessed/held for or on behalf of another person … including by the operator:
- acting as trustee or bailee; or
- being obliged to ensure that the underlying assets are dealt with on the instructions of the other person. (emphasis added)
According to paragraph 1.84 of the EM:
Arrangements that involve a person holding assets on behalf of another as trustee or bailee are captured. So too are arrangements for a client to transfer full title in digital tokens in return for a contractual right to instruct the operator in relation to how those digital tokens are dealt with. [emphasis and underline added]
ACSA commented in relation to the exposure draft legislation:
We request further clarification on the relationship between central securities depository (CSD) services, traditional custodial services, and the new categories of DAP and TCP. Specifically, what are the substantive differences between the regulatory regime for DAP/TCP and the existing frameworks for central depositories and custodians? How will the new rules apply in practice to platforms that perform similar functions to CSDs? (p. 2)
Possible regulatory duplication and overreach by ASIC
Law firm KWM has commented: ‘The breadth of several concepts including “digital token” … makes these proposals potentially relevant to multiple platforms that have nothing to do with Bitcoin or other blockchain-based assets.’
DECA stated:
The Bill also lacks clear boundary tests distinguishing between DAPs, Tokenised Custody Platforms (TCPs), managed investment schemes (MISs), and financial markets, leading to potential double regulation and uncertainty in classification. (p. 12)
AFMA suggested:
… a list of specific exclusions [from the concept of ‘digital token’] that can be expanded by the Minister over time, might reduce unnecessary considerations of unintended crossover of the new regime with existing arrangements. For example, a bank account password might be stored on a cloud storage file system, the bank account qualifying as a Digital object, the password as a token, and the cloud storage provider as a Digital Asset Platform. (p. 2)
While ASIC is of the view that many digital assets are financial products under the current law, the changes would confirm this to be the case, resulting in a significant increase in ASIC’s remit. In relation to digital assets held under a DAP or a TCP, it would be able to:
ABIB has asserted that Bitcoin is a commodity and not a financial product (p. 14). Further, it has claimed that the Bill’s broad definition of DAP would ‘extend AFSL-level obligations into a new market that deliberately ignores the fundamental differences between securities, managed investments, and commodity-like assets such as Bitcoin.’ Industry critics like ABIB are concerned that the Bill blurs the distinctions between different products and expands ASIC’s powers into the area of commodity regulation.
It can also be argued that failures like Terra and FTX have been attributed to fraud and defects in internal systems (pp. 8–9), more than issues related to regulatory classification or licensing.
Requirement to obtain an AFSL
Under the Bill, DAPs and TCPs would be required to hold an Australian Financial Services Licence (AFSL) (EM, para 1.109). Their obligations would be tailored to reflect their structure and risk profile.
DECA commented in relation to the Exposure Draft (p. 14):
The Draft Bill overlays new DAP and TCP authorisations on top of existing Australian Financial Services Licence (AFSL) categories without a clear sequencing mechanism. It remains unclear whether platforms must hold both DAP/TCP authorisations and existing custody or dealing permissions before commencing operations … Treasury should confirm that DAPs and TCPs holding an AFSL are not required to obtain separate custodial and depository authorisations.
Opponents of the Bill are quoted as saying that smaller or specialized crypto platforms, particularly those dealing only in Bitcoin, might struggle with the administrative and financial burden of obtaining an AFSL under the expanded licensing regime. This could reduce market competition or force consolidation. This is despite the exemption for ‘genuinely small’ operators (discussed below).
Minister’s deeming powers
Item 14, proposed section 767B would empower the Minister (by legislative instrument) to extend the definition of a financial market to include certain digital asset platforms that deal in digital tokens which are not otherwise financial products. Under proposed subsection 767B(2), the declaration may be unconditional or conditional, and may apply for a specified period or indefinitely.
While a legislative instrument would be disallowable, this might be regarded as a ‘Henry VIII clause’ which would allow the Government to effectively alter the application of primary legislation. The Senate Standing Committee for the Scrutiny of Bills has frequently commented on Henry VIII clauses. The clause means that significant regulatory change could occur through delegated legislation rather than being subject to full parliamentary debate. It could lead to uncertainty for industry and ‘scope creep’, and reduce Parliament’s role in setting the regulatory framework for financial markets.
On the other hand, AFMA argued for wider Ministerial deeming powers:
[O]ur main recommendation is that Treasury adjust the Exposure Draft to extend the deeming powers of the Minister proposed under 767B to bring types of products and platforms into, or carve them out of, the regime as needed from time to time. This should go to the definitions of Digital Object, Digital Token, but it should also grant more general powers in relation to types of Digital Asset Platforms and Tokenised Custody Platform. Gaining post-legislation flexibility would de-risk the project for Treasury and increase the potential for the arrangements to evolve with sometimes fast changing international developments. (p. 1)
This recommendation appears to have been partially adopted by proposed paragraph 761GB(1)(b), discussed above, which enables an electronic record to be prescribed not to be a digital token.
Supervision and ministerial powers
In relation to the Exposure Draft, DECA raised concerns about the powers given to the Minister to prohibit certain conduct and transactions from occurring through DAPs or TCPs:
Sections 912BH to 912BI of the Draft Bill grant the Minister broad powers to declare, prohibit, or vary digital asset activities without defined statutory criteria, timelines, or procedural safeguards. ASIC also gains open-ended authority under section 912BE to issue standards governing capital, custody, disclosure, and conduct, without a mandatory requirement for public consultation or ministerial oversight. The absence of proportionality tests and review mechanisms risks arbitrary or inconsistent application of powers, deterring innovation and investment in the domestic market. (p. 18)
Despite these concerns, as with the exposure draft provisions, proposed sections 912BH and 912BI contain safeguards. Proposed section 912BI specifies certain matters to which the Minister must have regard in deciding whether to make a declaration under proposed subsections 912BH(1) or (3). Importantly, ASIC, APRA and the Reserve Bank are all permitted to provide advice to the Minister on their own initiative about any proposed prohibitions and are also required to provide such advice if requested by the Minister.
Exemptions for public digital token infrastructure and custodial staking arrangements
Public digital token infrastructure refers to open, decentralized systems (like certain blockchains) that facilitate the transmission, processing and recording of data in relation to digital tokens without needing permission from any central authority or gatekeeper. A custodial staking arrangement has been defined in the US as a service where a third party, such as a cryptocurrency exchange or specialized service provider, takes control (custody) of a user's digital assets to perform the technical process of staking on their behalf (staking is defined above).
Both public digital token infrastructure (defined in items 58 and 59, amended section 9 and proposed section 9E) and custodial staking arrangements (item 59, proposed section 9F) would be exempt from regulation as a MIS or financial product under the Bill. DECA commented:
The Draft Bill’s treatment of exemptions for self-custody [EM, p. 20], intermediated staking, and public infrastructure is too narrow and lacks clarity. The absence of explicit carve-outs for wallet software, validator nodes, and infrastructure providers risks capturing non-custodial or technical services that do not handle client assets. Additionally, uncertainty remains over whether intermediated staking exemptions extend to non-reward benefits or to tokenised representations issued by licensed TCPs. (p. 17)
Exemptions for 'genuinely small and lower risk' operators
According to paragraph 1.232 of the EM (p. 54):
There are two categories of service providers that are exempt from holding an AFS licence because they are considered to pose a minimal risk as:
- they are low-value (i.e. not meeting a prescribed financial threshold); or
- the services they provide are not considered a significant part of their business.
Platforms that hold less than $5,000 in digital assets per customer and process under $10 million in total transaction volume per year do not need an AFSL. The $5,000 and $10 million amounts can be increased by prescribing in regulations a higher amount (items 67 to 70, proposed subparagraph 911A(2)(ja), and subsection 911A(4B)).
Supporters argue that this approach allows early-stage projects (and other lower risk operators) to operate without facing full financial services requirements from day one. KPMG considered that:
… the exemption for low value facilities may be difficult to monitor given fluctuations in value. Consideration could be given as to whether the dollar amount thresholds should be assessed on an ongoing basis (i.e. at any given point in time), or over a reasonable time period to allow for fluctuations and also to enable providers to take action in response to reaching a threshold. (p. 3)
Under proposed paragraph 911A(2)(jb), there would be an exemption where a person advises another person about the existence of, or arranges for another person to use, a DAP or TCP in the ordinary course of the first person’s business and this is an insignificant part of their business – for example, a grocery business that provides a variety of payment methods for customers to purchase goods and services (paragraph 1.241 of the EM).
Capital and financial adequacy standards
As set out in ASIC guidance such as Regulatory Guides 133 and 166 and ASIC Corporations (Financial Requirements for Custodial or Depository Service Providers) Instrument 2023/648, ASIC capital and asset‑holding standards are prudential‑style requirements imposed on certain AFS licensees—particularly market intermediaries, custodians, and platform operators. These requirements include solvency and net tangible assets and cash needs. The Treasury Proposal Paper stated that platforms that hold, control, or intermediate access to client digital assets create similar risks to consumers as traditional custodial and market intermediaries (p. 2) . According to para 1.170 of the EM, applying such standards ‘ensures consumers receive a consistent level of protection [e.g. from loss of capital] regardless of whether their assets are held under [DAPs], [TCPs] or other asset-holding arrangements.’
According to DECA:
Section 912BE [‘asset-holding standards’] empowers ASIC to establish written standards for licensees, including rules for financial resources, custodial conduct, and governance. However, no statutory limits or consultation requirements are imposed. ASIC could set net-tangible-asset (NTA) or capital thresholds comparable to those for traditional custodians … which would be disproportionate for smaller DAPs and TCPs … Comparable frameworks, such as Singapore’s Payment Services Act 2019 and the United Kingdom’s FCA [Financial Conduct Authority] handbook, apply tiered capital requirements calibrated to transaction volume and systemic importance. (pp. 6–7)
Item 37, proposed paragraph 912BE(2)(a), states that ASIC must be reasonably satisfied that a proposed standard is ‘adequate, effective and appropriate … including by being reasonably proportionate for differences in the size, scale or nature of such platforms’.
Proposed paragraph 912BE(1)(c) enables ASIC to make standards in relation to ‘any matter prescribed by regulations for the purposes of this paragraph’. While not a Henry VIII clause, this could raise Scrutiny of Bills issues because it gives ASIC substantial latitude to prescribe asset-holding standards. The EM (paras 1.173-1.175) states that the power is justified, including because it would help reduce the complexity of the Act, would allow the Government to make timely changes to the framework, and would require ASIC to be satisfied of several matters before making a standard.
Treatment of wrapped tokens
The Bill clarifies the treatment of ‘wrapped’ digital tokens under the financial services law. According to OSL.com:
Wrapped tokens are digital assets that represent another cryptocurrency on a different blockchain … For example, a Bitcoin cannot be directly used on the Ethereum blockchain because these two networks have different architectures. However, a wrapped token can solve this issue by creating a tokenised version of Bitcoin that operates on the Ethereum network.
Item 3, proposed section 765E would define wrapped token as a digital token that confers a right (the ‘redemption right’) to redeem, or direct the delivery of, specific things defined as ‘related assets’. The redemption right must be disregarded when determining whether it should be classified as a financial product. However, this rule does not apply if:
- the related asset is a financial product and the person who possesses the token does not have rights or interests equivalent to holding the asset directly, or
- the regulations specify otherwise.
According to law firm Hall & Wilcox, this means that ‘wrapped‘ tokens will not, for example, be treated as derivatives or managed investment schemes solely on the basis of containing a redemption feature.
Also, ASIC has registered ASIC Corporations (Stablecoin and Wrapped Token) Instrument 2025/867, providing temporary regulatory relief from the AFSL requirement for distributors of eligible stablecoins and eligible wrapped tokens.
Decentralised platforms
Decentralized Autonomous Organisations (DAOs) (digital entities operating through blockchain technology) and decentralised platforms often have no central legal entity or identifiable owner. Governance is distributed among token holders, who may be pseudonymous and globally dispersed. This makes it hard for regulators (including ASIC) to determine who is responsible for compliance or liable for breaches.
The LCA stated:
As for decentralised cryptocurrency exchange (DEx) platforms, we assume the intent is that they be outside the regime altogether. We believe such an outcome would be appropriate, both as being in line with the approaches taken in major jurisdictions such as the European Union, and also in light of the difficulty of addressing and enforcing against entities that may be operating as unincorporated businesses. (p. 2)
However, example 1.17 in the EM (p. 23) indicates that DAOs are intended to be covered. In the example, one hundred people each hold a key to a smart-contract wallet containing digital tokens worth $10,000, with each person having contributed $100 worth of digital tokens. The wallet requires 51 keys to authorise any transfer. It stated: ‘each of the 100 key holders is capable of controlling (and therefore possesses) the tokens contingent on cooperation with 50 other persons.’
INFO 225 makes clear ASIC’s view the laws apply whether arrangements are decentralised or not. However, traditional enforcement mechanisms rely on serving legal process to a company or its directors. DAOs lack a registered office, directors, or physical presence, complicating service of process and jurisdiction. Therefore, ASIC may find enforcement challenging.
Offshore enforcement
Elements of the Bill rely on the power under section 51(xx) of the Constitution in relation to ‘foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth’. As explained in ASIC Regulatory Guide 121 Doing financial services business in Australia (RG 121) (pp. 14–17), ASIC’s enforcement powers apply primarily to entities ‘carrying on business in Australia’ or ‘inducing’ people in Australia to use their services (section 911D of the Corporations Act).
ASIC’s view in INFO 225 is that:
The use of offshore or decentralised structures does not mean that key obligations under Australian laws do not apply or can be ignored: see Regulatory Guide 121 Doing financial services business in Australia (RG 121). Australian laws apply where the digital asset is promoted or sold, or services are provided in relation to them, in Australia, including from offshore. We encourage entities to build their products and services in a way that complies with the intention of the laws in place to safeguard consumers and the integrity of financial markets in Australia.
Cross-border enforcement is likely to be an issue under the proposed law. The Bill does not create new international enforcement mechanisms. According to DECA ‘The Bill … lacks provisions for supervisory cooperation or substituted compliance with equivalent foreign regimes, which could undermine Australia’s global competitiveness and alignment with international best practice.’ (p. 10)
In the absence of a local presence or local assets, ASIC will need to rely on mutual assistance treaties and cooperation with foreign regulators, and existing frameworks like International Organization of Securities Commissions (IOSCO) agreements for information sharing. As indicated by law firm Walkers Global, fragmented global rules may create jurisdictional arbitrage opportunities as firms choose to relocate to low-regulation jurisdictions.
Licensing of crypto advice
As noted above, digital assets—such as cryptocurrencies, tokens, and tokenised assets—may (or may not) qualify as financial products. This will affect whether financial advice can be provided by a licensed financial adviser.
Swyftx suggested that the ‘financialised functions’ of token trading and token staking be considered a ‘financial service’ that can be provided through a single facility (originally known as a digital asset facility (DAF)). It argued this could also be structured to address the gap in relation to financial advice. It stated:
At present, the Proposal would permit licensed financial advice providers to provide advice in relation to DAFs, but not digital assets, themselves (unless a particular digital asset was determined to be a financial product). In other words, a licensed financial advisor could provide advice in relation to Swyftx and our competitors, but not in relation to whether to invest in Bitcoin or Ethereum … Our discussions with customers and financial planners are that, overwhelmingly people want advice on the digital assets, themselves, not exclusively where they should have their digital assets held. Similarly, there is a section of the financial planning market that wants to provide advice in relation to digital asset investments, but they want the certainty that they will be covered when doing so. (pp. 5‑6).