Chapter 1Introduction
1.1On 5 February 2026, the Senate referred the Corporations Amendment (Digital Assets Framework) Bill 2025 (the bill) to the Senate Economics Legislation Committee (the committee) for inquiry and report by 16 March 2026.
1.2The committee’s report on the bill contains two chapters:
Chapter 1—provides an overview of the bill and the inquiry process; and
Chapter 2—considers inquiry participants’ evidence on the bill.
Purpose of the bill
1.3The bill seeks to implement the Australian Government’s ‘commitment in the 2024-2025 Budget to modernise Australia’s digital asset regulation’. In particular, the bill proposes to amend the Corporations Act 2001 (Corporations Act) and the Australian Securities and Investments Commission Act 2001 (ASIC Act) to:
define core concepts of ‘digital token’, ‘digital asset platform’ (DAP) and ‘tokenised custody platform’ (TCP);
apply financial services law in a way that is tailored to DAPs and TCPs;
provide exemptions for ‘certain digital token arrangements’; and
provide the Australian Securities and Investments Commission (ASIC) and the Minister with powers to regulate DAPs and TCPs.
1.4In introducing the bill, the Assistant Treasurer and Minister for Financial Services, Dr Daniel Mulino MP, stated digital assets are ‘reshaping finance’:
Blockchain technology and tokenisation are unlocking new ways to invest, trade and transfer wealth. They promise faster settlement, lower costs, and broader access to markets that were once out of reach. Tokenisation can turn real-world assets like property, commodities or bonds into digital tokens that can be traded instantly and securely.
This is not a distant future. It is happening now. Global institutions are experimenting with tokenised securities, central banks are exploring digital currencies and investors are demanding safe, regulated ways to participate.
1.5While recognising the benefits of digital assets for Australia, Dr Mulino also noted the associated risks, including that ‘…it is currently possible for a business to hold an unlimited value of client digital assets without any financial law safeguards’. Dr Mulino said the bill responds to such challenges, by ‘…reducing loopholes and ensuring comparable activities face comparable obligations, tailored to the digital asset ecosystem’. Further, Dr Muliono said the bill focuses on regulating the businesses which hold client assets as the ‘potential source of risk’ rather than the ‘underlying technology itself’.
Key provisions
1.6As outlined in this section, the bill contains a range of key provisions, including:
to define concepts for digital tokens, DAPs and TCPs;
to add DAPs and TCPs to the definition of a financial product in the Corporations Act and the ASIC Act;
to tailor financial service provision in respect of DAPs and TCPs;
to require persons providing financial services in relation to DAPs and TCPs to hold an Australian Financial Services Licence (AFS licence);
to specify obligations to issuers of DAPs and TCPs
to exempt AFS licensees from certain obligations when providing financial services with respect to DAPs and TCPs;
to exempt issuers of DAPs and TCPs from holding an AFS licence if the value of transactions on the platform does not exceed $10 million per year;
to apply ASIC’s powers relating to financial products, including to make product intervention orders, to financial products that are DAPs or TCPs;
to exempt ‘public digital token infrastructure and custodial staking arrangements from certain regulation under the financial services law’;
to clarify the ‘treatment of ‘wrapped’ digital tokens under the financial services law’; and
to apply a transitional period in relation to the commencement and application of the new regime.
Core concepts
1.7The bill seeks to introduce the core concepts of ‘digital token’, DAP and TCP to the Corporations Act. As the Explanatory Memorandum states:
These terms are fundamental to the operation of the regulatory framework and provide clarity and certainty as to the digital tokens and related intermediary arrangements which are captured by the framework. The terms are important in determining whether a person needs to obtain an AFS licence, and if so, what obligations apply to that licence.
Meaning of digital token
1.8Proposed section 761GB seeks to establish the meaning of a digital token. Proposed subsection 761GB(1) provides that a digital token is an ‘electronic record that one or more persons are capable of factually controlling or an electronic record prescribed by regulations’.
1.9Additionally, proposed subsection 761GB(1) provides that regulations may prescribe a class of electronic record not to be a digital token. The Explanatory Memorandum states such regulation would allow the Australian Government to ‘make timely changes to the framework’, including:
clarifying the operation of the framework in relation to certain digital tokens where there is stakeholder uncertainty or a lack of clarity;
ensuring that the legislation remains up-to-date with a rapidly evolving and dynamic market;
providing a mechanism for addressing regulatory overlap; and
adapting the legislation to deal with new and emerging digital tokens and technologies.
Factual control of an electronic record
1.10Proposed subsection 761GB(2) provides that a person is capable of factually controlling an electronic record (whether alone or jointly with one or more other persons) if the person can:
(a)transfer the electronic record; and
(b)exclude one or more other persons from transferring electronic record; and
(c)demonstrate that the person can do the things in paragraphs (a) and (b).
1.11A person who factually controls an electronic record is ‘generally taken to have possession of the digital token’.
1.12The Explanatory Memorandum notes the concept of factual control is ‘framed broadly to allow for flexibility as technology evolves and new forms of digital token emerge’. While an electronic record includes ‘all types of information that could be generated, communicated, received, or stored electronically…’, it is not capable of being ‘exclusively transferred’.
1.13The Explanatory Memorandum notes a digital token is different to an electronic record in that a token can be ‘controlled in the same way that a physical object can be possessed’. When a digital token shifts from a transferor to a transferee so does the ability to effect further transfers. The ‘ability to use or consume the digital token implicitly follows with this transfer’. This ‘rivalrous’ nature is why a person can have ‘the same legal relationship’ with a digital token as they would a physical object and ‘is the primary focus of the digital token definition’.
1.14The Explanatory Memorandum outlines a range of practical circumstances where an electronic record may, or may not, be considered a digital token. For instance, the Explanatory Memorandum provides the following example of ‘electronic records under technical encumbrance’:
Jie uses a smart-contract ‘time-lock’ for her stablecoin tokens as a forced savings measure. The stablecoin tokens are digital tokens before, during, and after they are ‘locked’ in the smart contract. Jie retains factual control throughout the time-lock period as she remains the only person capable of transferring the tokens, which she can do once the time-lock has expired. She continues to exclude others from transferring the tokens during this period. She can sign a message that cryptographically proves she is capable of these things at any time during the time-lock. The stablecoin tokens remain digital tokens while technically encumbered because they are still capable of being factually controlled once the time-lock expires.
Possession of a digital token
1.15The bill seeks to amend the definition of ‘possession’ in the Corporations Act to ‘reflect that possession has a specific meaning in relation to digital tokens’.Item 30 proposes to repeal section 86 of the Corporations Act and replace it with a new section that provides ‘possession’, in summary, means:
Where a person factually controls an electronic record, the person possesses the digital token in question, unless the exception in that provision applies … The regulations may also prescribe circumstances in which a person either does or does not possess the digital token.
1.16Proposed subsection 86(1) provides that the meaning of possession is otherwise preserved for things other than digital tokens.
1.17The Explanatory Memorandum notes that a person who has the legal right to direct the person who factually controls an electronic record ‘does not themselves posses the digital token’. Rather:
…a person that factually controls an electronic record possesses that digital token even if they are subject to a legal obligation to not exercise factual control over that digital token.
1.18The Explanatory Memorandum notes the amendments proposed in Item 30 ‘recognise that digital tokens are functionally equivalent to physical tokens in that they can be used and valued in the same ways’.
1.19The Explanatory Memorandum provides a range of practical examples to demonstrate the intended application of the definition of possession. For instance, the Explanatory Memorandum provides the following example of ‘possession by a custody service provider’:
Muhammad buys digital tokens from a broker. The digital tokens remain in the possession of the broker after his purchase. Muhammad has a contractual right to request delivery of the digital tokens to an address he factually controls with a private key only he knows. The broker factually controls and possesses the digital tokens. Muhammad does neither.
Joint possession
1.20Proposed section 86(3) establishes an exemption ‘in certain circumstances where a person will be taken to not possess a digital token despite being capable of factually controlling it’.As the Explanatory Memorandum states:
The exception applies where two or more people are concurrently capable of factually controlling the same digital token but the degree of control they have is unequal. For example, if a person requires the express cooperation of another person to transfer a digital token – and the other person can transfer the digital token unilaterally – then the first person does not possess the digital token but the second person does.
1.21The Explanatory Memorandum provides a range of practical examples to demonstrate the intended application of the concept of joint factual control. For instance, the Explanatory Memorandum provides the following example of a ‘two-of-two multi-signature wallet’:
Patricia and Toby each hold one of two private keys needed to transfer a token. Neither person can transfer the token without the other approving the transfer. Patricia and Toby factually control and possess the token jointly.
Meaning of a digital asset platform and a tokenised custody platform
1.22The bill provides that a DAP and a TCP are regulated under financial services law. As the Explanatory Memorandum notes:
The operator of these facilities is a custodian, and through these facilities, digital tokens are either possessed or are used to record holdings of assets or other digital tokens. Specifically:
a digital asset platform possesses digital tokens, and records clients’ interests in an account; and
a tokenised custody platform holds assets or possesses digital tokens, and records clients’ interests as digital tokens.
1.23The bill provides that an operator of a DAP or a TCP ‘issues’ the platform to another person who becomes a client when accepting the terms of the facility and creates an account with the operator. A client may subsequently ‘engage in conduct’ under a DAP or a TCP ‘after the platform has originally been issued, such as by buying, selling, depositing, or withdrawing digital tokens or assets through the platform’.
Meaning of a digital assets platform
1.24Proposed subsection 761GF(1) provides that a DAP is a facility under which:
(a)a person (the operator) possesses one or more digital tokens (the underlying assets); and
(b)the underlying assets are so possessed for or on behalf of another person, including by the operator:
(i)acting as trustee or bailee; or
(ii)being obliged to ensure that the underlying assets are dealt with on the instructions of the other person.
1.25The person which a DAP possesses the underlying assets for must be a ‘client under the facility or the nominee of such a client’. The underlying assets held by a DAP includes ‘any right, interest or claim of any kind including rights, interests or claims in or in relation to property that arise due to the possession of a digital token’.
1.26The Explanatory Memorandum notes that in circumstances where a facility meets both the definition of a DAP and a TCP, proposed subsection 761GC(4) provides the definition of a TCP ‘…takes priority, and the facility will only be regulated as a tokenised custody platform’.
Meaning of a tokenised custody platform
1.27Proposed subsection 761GD(1) provides that a TCP is facility under which:
a person, defined as the operator, identifies one or more assets (other than money), defined as the underlying assets; and
for each underlying asset, the operator creates a single digital token, possession of which confers a right to redeem, or directs the delivery of, the underlying asset; and
the operator holds each underlying asset for or on behalf of another person who possesses the digital token for the underlying asset, including by the operator as trustee or bailee, or by the operator being obliged to ensure that the underlying asset is dealt with on the instructions of the other person.
1.28Additionally, the bill provides that a facility is a TCP if there is a ‘one-to-one relationship between the underlying asset and the digital token’; this requirement ‘reflects that tokenised custody facilities should not be used as a vehicle to issue fractionalised interests in underlying assets’. Moreover, Item27 of the bill establishes specific requirements for TCPs, which supplement the ‘one-to-one relationship’ requirement, to further ensure TCPs ‘cannot be used to issue interests in mixed pools of assets, or fractionalised interests in assets’.
1.29The Explanatory Memorandum notes the definition of a TCP captures a ‘wide variety’ of custodial arrangements. This includes:
arrangements that ‘involve a person holding assets on behalf of another as trustee or bailee’; and
arrangements for a ‘client to transfer full title in the underlying assets in return for a contractual right to instruct the operator in relation to how those underlying assets are dealt with’.
Applying financial services law to DAPs and TCPs
1.30The bill seeks to apply financial services law to DAPs and TCPs with ‘appropriate adjustments to reflect the nature of these platforms and their inherent risks’. Financial services law, as defined in section 761A of the Corporations Act, includes:
…the parts of the [Corporations Act] that deal with MISs and financial services and markets – such as the single licensing regime for dealing in financial products, and financial products and services disclosure. The unconscionable conduct and consumer protection provisions related to financial services in the ASIC Act are also covered under the term.
1.31Items 2 and 75 of the bill seek to apply financial services law to DAPs and TCPs by including the platforms in the definition of a financial product within the Corporations Act and the ASIC Act. As the Explanatory Memorandum notes, a person intending to provide financial services in relation to a DAP or a TCP is ‘subject to the same licensing and other obligations with respect to’:
who can apply for and hold an AFS licence; and
the requirement to comply with the general conditions of an AFS licence.
1.32DAPs and TCPs would also be ‘subject to tailored disclosure and other obligations under the framework of the financial services law, including under minimum standards made by ASIC, to address the specific characteristics of digital assets platforms and tokenised custody platforms’.
1.33Further, Items 2 and 75 provide that a DAP or a TCP is only a financial product if it is not a managed investment scheme (MIS). Item 27 of the bill stipulates criteria which, if met, excludes a DAP or a TCP from being regulated as a MIS.
When a DAP is a financial market or clearing and settlement facility
1.34The Explanatory Memorandum states that:
Depending on the nature of a facility, it may be a ‘digital asset platform’ and ‘financial market’ or ‘clearing and settlement facility’ (or both). Because of subparagraphs 765A(1)(l)(i) and (ii) of the Act, such a facility is not a financial product to the extent it is a financial market or clearing and settlement facility, despite the amendments made by this Bill to regulate digital asset platforms as financial products.
1.35In such circumstances, the facility will be regulated as a financial market or clearing and settlement facility (CS facility) (or both) instead of being regulated as a financial product. The Explanatory Memorandum notes:
An AFS licence is not required to operate a financial market or clearing and settlement facility. Instead, operators of these facilities are subject to specific licensing regimes.
1.36However, in circumstances where a component of a DAP ‘is not a financial market or clearing and settlement facility (for example, where the platform makes nonfinancial products available), that component remains a financial product’. The Explanatory Memorandum notes that, in such cases, ‘the operator is subject to the licensing and other requirements for providers of financial services to issue the component of the platform that is a financial product’.
AFS licences
1.37The bill provides that operators who obtain an AFS licence to deal in DAPs or TCPs ‘need to comply with the general obligations of an AFS licence’ as outlined in Section 912A of the Corporations Act.
1.38Further, Item 37 of the bill provides that an AFS licensee authorised to operate a DAP or a TCP must comply with specific obligations, including:
complying ‘with the asset holding standards and the transactional and
settlement standards, to the extent that the standards relate to the financial services authorised by the licence relating to the issuing of the platform’; and
having ‘platform rules that deal with certain matters’.
1.39A licensed operator of a DAP or a TCP must also comply with any prohibition of certain conduct, as made by the Minister via delegated legislation.
1.40A licensed operator of a DAP or a TCP which fails to comply with the standards, platform rules or relevant prohibitions is subject to a ‘civil penalty and is a breach of the financial services law, allowing ASIC to exercise’ its powers in relation to the licensee.
Asset holding standards
1.41Items 36 and 37 of the bill provide that ‘ASIC may, by legislative instrument, make standards (called asset-holding standards) that deal with specific matters in relation to digital asset platforms or tokenised custody platforms’.
1.42Proposed subsection 912BE(1) outlines the ‘minimum requirements for asset-holding functions’ of a DAP or a TCP. As the Explanatory Memorandum notes, the asset-holding standards may deal with:
the activities and conduct of the licensee and their authorised representatives in relation to:
possessing and safeguarding the underlying assets of the platform;
record keeping, reconciliation and reporting in relation to the underlying assets; or
how the underlying assets of the platform are used;
the provision by licensees of supplementary services related to the underlying assets, including fund accounting, compliance monitoring, performance reporting or tax-related functions;
any matter prescribed by regulations.
1.43The Explanatory Memorandum states that managing requirements for the asset holding functions of DAPs and TCPs via standards ‘ensures consumer safeguards for comparable products regulated under the financial services law can be applied to safeguard client assets but adjusted to respond to the unique features of digital token arrangements’.
Transactional and settlement standards
1.44Items 36 and 37 of the bill provide that ‘ASIC may, by legislative instrument, also make standards (called transactional and settlement standards)’ which deal with ‘the conduct of persons in relation to the underlying assets of a digital asset platform or tokenised custody platform issued by an AFS licensee’ and ‘any matter prescribed by regulations’.
1.45As the Explanatory Memorandum notes, the ‘standards establish minimum requirements for how client transactions are executed and settled for these platforms’. In particular, the standards may deal with, but are not limited to:
facilitation of acquisitions, disposals, encumbrances or settlements of the underlying assets of a platform;
matched principal trading and other execution models that involve the intermediary facilitation of such transactions;
handling, prioritising and executing of the instructions of a client under a platform (including across different business models such as market operation, marking making, liquidity provision, brokerage or dealing);
the conduct of persons engaged by the issuer licensee of such a platform in relation to the performance of any of the above (this includes the conduct of authorised representatives, agents and subcontractors).
1.46Proposed subsection 912BF(3) provides that, before making a standard, ASIC must be reasonably satisfied that the standard meets several conditions, including that the ‘standard is adequate, effective and appropriate for a range of different types of digital asset platforms and tokenised custody platforms’.
Platform rules
1.47Item 36 of the bill defines the platform rules of a DAP or a TCP as:
…any rules (however described) that are made by the issuer of the platform, or contained in the issuer’s constitution, and that deal with the activities or conduct of persons in relation to the platform.
1.48Proposed subsection 912BG(1) stipulates the content of the platform rules of DAP or a TCP. Required rules include ‘transparent and non-discriminatory eligibility criteria for identifying who can become a client’ and requirements for the licensee to disclose certain information to a potential client.
Treatment of wrapped tokens
1.49As noted in the Explanator Memorandum, a ‘wrapped token is a digital token, the possession of which gives a right to redemption, delivery or possession of another asset (which may include another digital token)’. Further, the Explanatory Memorandum noted:
Uncertainty can arise in the characterisation of this redemption right for the purposes of determining whether the rights attached to a wrapped token make the token, other rights or interests attached to it, or an arrangement it is part of a financial product (such as a derivative).
1.50According to the Explanatory Memorandum, Item 3 of the bill addresses this issue ‘by allowing the redemption right to be disregarded in certain circumstances for the purposes of determining whether the wrapped token is, or rights or interests attached to the wrapped token are, a financial product’.
AFS licence exemptions
1.51The bill provides that two categories of service providers are ‘exempt from holding an ASF 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.
1.52The low value exemption provides that the issuer of a DAP ‘does not need to hold an AFS licence if the total market value of transactions across all its platforms does not exceed $10 million over a 12-month period’.
1.53The insignificant part of business exemption ‘covers a person that arranges for another person (i.e. a client of the first-mentioned person) to use a digital asset platform or tokenised custody platform or give that person advice about its existence in the ordinary course of an otherwise primarily non-financial services business’.
Exemption from the prohibition on hawking financial products
1.54The bill provides that promoters, operators and those involved in the operation of a DAP of a TCP are ‘exempt from the anti-hawking provisions’ under the Corporations Act. However, the exemption only applies:
…in relation to offers, requests, or invitations relating to financial products that are equitable rights or interests in other financial products arising because of a holding, or an offer to hold or arrange for the holding of, the other financial products through a digital asset platform or tokenised custody platform.
Exemption from market-making provision
1.55Proposed subsection 766D(2) provides that ‘certain issuers of TCPs are exempt from being considered as ‘making a market’ (within the meaning of subsection 766D(1) of the [Corporations Act]) for a financial product’. The Explanatory Memorandum states that the exemption applies:
…if the issuer is stating the prices at which they acquire or dispose of the products only for the purposes of holding, redeeming or directing the delivery of those products under the platform.
Tailored disclosure obligations for DAPs and TCPs
1.56The bill provides that a ‘a new disclosure framework applies’ if an AFS licensed operator issues a DAP and TCP to a retail client in the course of a financial services business.
1.57In particular, the disclosure obligations provide that:
a licensee seeking to issue a DAP or a TCP to a retail client must give that person a ‘DAP/TCP Guide’ before issuing the platform (Item 43);
the ‘DAP/TCP Guide must include all information that a person, as a retail client, reasonably requires to decide whether to become a client under the platform (Item 50);
regulations may provide other matters that the DAP/TCP Guide must include (Item 50); and
if a ‘licensee fails to give a DAP/TCP Guide to a prospective client when making an offer to issue a digital asset platform or tokenised custody platform, they are liable for a civil penalty.
Platform voting policy
1.58Items 43 and 50 provide that an AFS licensed operator of a DAP or a TCP:
…must ensure the platform maintains a policy (defined as a voting policy) that deals with the exercise of any voting rights or governance rights arising from the platform’s underlying assets and any other assets held or possessed through the platform. The voting policy must contain certain required information and be written and presented in a clear, concise and effective manner.
1.59A licensee who fails to have a voting policy before offering a DAP or a TCP to retail clients is subject to a civil penalty. A civil penalty also applies should the licensee fail to keep the voting policy ‘accurate and administered for the platform’.
Joint operation and the exception to liability for defective financial services guide
1.60As outlined in the Explanatory Memorandum, the bill’s proposed amendments contemplate circumstances where a DAP or a TCP ‘is jointly issued by two or more issuers’. Whether a DAP or a TCP ‘is jointly issued by two or more persons, or is issued by a single operator for whom one or more persons act as agent depends on the legal nature of those relationships’.
1.61The Explanatory Memorandum notes that such arrangements are reflected in the bill’s proposed ‘exceptions to the criminal and civil liability offences in sections 952E and 952G of the [Corporations Act] which relate to defective disclosure documents or statements where the defect was not known’.
Licensee must make a target market determination
1.62The Explanatory Memorandum notes that the existing design and distribution requirements in the Corporation Act relating to financial products for retail clients also apply to DAPs and TCPs. In particular, Item 47 of the bill provides ensures that:
…a person is required to make a target market determination in relation to a financial product if the person is required to prepare a DAP/TCP Guide for the product, since a Product Disclosure Statement is not required for digital asset platforms or tokenised custody platforms.
New powers of the Minister
Powers to extend or exempt the meaning of financial market or clearing and settlement facility for certain DAPs
1.63Items 14 and 19 of the bill provide the Minister may, by legislative instrument:
deem certain digital asset platforms to be a financial market and/or clearing and settlement facility; and
exempt certain digital asset platforms from constituting a financial
market and/or clearing and settlement facility.
1.64The Expplanatory Memorandum states these ‘powers ensure that digital asset platforms can be regulated under the most appropriate licensing regime that effectively addresses the specific risks relating to the platform’.In particular, the powers:
…allow the Minister to address cases where the ordinary application of the financial services law is not fit-for-purpose, after taking certain matters into account – such as the likely effect on the efficiency, integrity and stability of the Australian financial system. It is not intended to place disproportionate regulatory burden on operators nor constrain innovation or technological development in the industry.
Powers to make a prohibition declaration
1.65Item 37 of the bill provides that, if ‘financial services authorised by an AFS licence relate to the issuing of a digital asset platform or tokenised custody platform, the Minister may, by legislative instrument, declare that ‘conduct involving a specified financial product must not happen through the platform’.
1.66In making such a declaration, the Minister must have regard to certain factors including ‘likely effect on the Australian economy and on the efficiency, integrity and stability of the Australian financial system’ and regulatory impacts.
Exemptions for public digital token infrastructure
1.67The bill provides that public digital token infrastructure (PDTI) is exempt from regulation as a MIS and a financial product. The bill defines PDTI as:
...any software or hardware (or combination of both) that is used for transmitting, processing, or recording electronic records that are digital tokens, or electronic records relating to digital tokens, where either:
certain protocols apply to the infrastructure; or
the infrastructure is prescribed in the regulations.
1.68For the PDTI exemption to apply, proposed subsection 9E(2) stipulates the infrastructure’s protocols must first satisfy certain requirements that distinguish it from centralised infrastructure’ The Explanatory Memorandum outlined the requirements as follows:
the protocols must be a set of open source and publicly accessible standards for transmitting, processing and recording the electronic records in a non-discretionary manner.
the protocols must permit any person to contribute to the integrity, functionality and reliability of the infrastructure by conducting activities involving transmitting, processing and recording such electronic records;
the protocols must not be reliant on any participant whose role is so critical that transmission, processing, or recording cannot happen without them; and
the protocols must not be prescribed in regulations made for the purposes of this definition.
Application and transitional provisions
1.69Item 98 of the bill seeks to insert a new part in Chapter 10 of the Corporations Act to set out transitional and application provisions for the bill’s amendments.
1.70In particular, the bill provides for a six month transition period, following the bill’s commencement for amendments relating to financial circumstances. As the Explanatory Memorandum states:
The amendments in Schedule 1 that are connected with financial services apply to a provider of services in relation to a digital asset platform or tokenised custody platform from commencement, but not during the first six months following commencement (i.e. the ‘transition period’) if the ‘responsible person’ (the provider or a person providing on their behalf) does not hold an AFS licence authorising the provision of the service or services.
Financial impact
1.71The Explanatory Memorandum states the bill is ‘estimated to have nil or minimal financial impact’.
Commencement
1.72If enacted, the bill would commence the ‘day after the end of a period of 12 months beginning on the day after Royal Assent’.
Compliance cost implications
1.73The Explanatory Memorandum states the bill’s compliance costs are ‘expected to be an estimated $28.4 million per year’.
Consultation
1.74Prior to the bill, the Australian Government completed the three consultations in relation to digital asset reforms:
March 2022—the Department of the Treasury (Treasury) released consultation paper titled Crypto Asset Secondary Service Providers which sought stakeholders’ views on options for mitigating harms associated with digital assets;
February 2023—Treasury released a consultation paper titled Token Mapping which explained how existing financial laws apply to digital assets; identified gaps in the law; and recommended against solving this problem by introducing a new taxonomy; and
October 2023—Treasury released a proposal paper titled Regulating Digital Asset Platforms which proposed to regulate DAPs rather than digital assets themselves as ‘earlier consultation identified platforms as a key cause of consumer harms in the digital asset ecosystem’.
1.75Further, in September 2025, Treasury published exposure draft legislation and invited submissions from stakeholders. Treasury’s consultation on the exposure draft ran for a month (from 25 September to 24 October 2025) and ‘[a]round 300 participants attended Treasury facilitated sessions and 59 written submissions were received’.
1.76Following the consultation, the exposure draft of the bill and the Explanatory Memorandum were amended to address stakeholder feedback.
Human rights implications
1.77As outlined below, the Explanatory Memorandum states that the bill engages the following human rights under the International Covenant on Civil and Political Rights:
the right to privacy (Article 17); and
right to a fair trial (Article 14).
1.78To the extent that these human rights are engaged, the Explanatory Memorandum states that the bill:
…is compatible with human rights. It promotes transparency, accountability and consumer protection within the digital asset ecosystem. To the extent that it may limit certain rights, those limitations are reasonable, necessary and proportionate.
The right to privacy
1.79The bill engages the human right privacy as it contains provisions that authorise ‘the collection and handling of personal information’. As the Explanatory Memorandum notes, the bill:
…enables ASIC and other regulators to collect and use certain information about licensees and participants of digital asset and tokenised custody platforms for compliance and enforcement purposes.
1.80In particular:
proposed section 912BE (asset holding standards)—would permit ASIC to ‘make standards dealing with recordkeeping, reconciliation, and reporting requirements for digital assets and tokenised custody platforms; and
proposed sections 1020AN–1020AR (disclosure framework)—would ‘impose disclosure and information-handling obligations on platform licensees in relation to platform operations, client rights, and underlying or associated assets’.
1.81The Explanatory Memorandum notes that these measures are prescribed by law, directed to legitimate objectives and proportionate.
Right to a fair trial
1.82The bill engages the right to a fair hearing as it introduces new civil penalty provisions to ‘regulate the conduct of financial services licensees and platform operators For example, contravention of proposed sections 912BB–912BH and 766M are subject to civil penalty provisions.
1.83The Explanatory Memorandum states the proposed civil penalty provisions are subject to existing procedural safeguards to ensure court proceedings are conducted in accordance with the principles of natural justice. Further, the Explanatory Memorandum notes that ‘[a]ny limitation on the presumption of innocence is reasonable, necessary and proportionate to the legitimate objective of maintaining compliance and market integrity’.
Legislative scrutiny
1.84This section outlines legislative scrutiny of the bill undertaken by:
the Senate Standing Committee on the Scrutiny of Bills; and
the Parliamentary Joint Committee on Human Rights.
Senate Standing Committee on the Scrutiny of Bills
1.85The Senate Standing Committee on the Scrutiny of Bills (Scrutiny Committee) examined the bill in its Scrutiny Digest 2 of 2026 and commented on:
delegated legislation modifying or exempting primary legislation; and
reversal of the evidential burden of proof.
Delegated legislation modifying or exempting primary legislation
1.86The Scrutiny Committee drew senators’ attention to concerns that the regulation making power in proposed subsection 911A(4B) of the bill could be used to vary the Corporations Actwithout appropriate parliamentary scrutiny.
1.87In particular, proposed subsection 911A(4B) allows for regulations to stipulate a higher monetary threshold, or a methods of determining such thresholds, than those applicable under the proposed AFSL licence exemption for DAPs (per proposed paragraph 911A(2)(ja)). The Scrutiny Committee stated it holds ‘significant scrutiny concerns’ with provisions that allow for delegated legislation to make substantive amendments to primary legislation. As such, the Scrutiny Committee said it expects sound justification be provided in the Explanatory Memorandum for any such provisions.
1.88The Scrutiny Committee acknowledged the nature of the exception in proposed paragraph 911A(2)(ja) ‘is such that adjustment over time may be appropriate’. Further, the Scrutiny Committee noted that ‘as a safeguard, that the primary legislation provides for a floor of $10 million below which cannot be lowered by regulation’. Nonetheless, the Scrutiny Committee considered that:
…the explanatory materials have not sought to explain the exceptional circumstances or operative safeguards that may justify permitting regulations to modify an Act of the Parliament in this instance.
Reversal of the evidential burden of proof
1.89The Scrutiny Committee drew senators’ attention to concerns that certain provisions in the bill would reverse the evidential burden of proof for a defence established to fault-based offences under the Corporations Act.
1.90In particular, the Scrutiny Committee reported that items 44 and 45 of the bill (inserting proposed subsections 952E(4A) and 952G(11)) would introduce a defence to several offences in the Corporations Act for financial service licensees that distribute a defective disclosure statement or related document. The defence would apply:
…where any defect in a disclosure document for a digital asset or tokenised custody platform relates solely to a section for which another named licensee is responsible and concerns the services that licensee will, or would be likely to, provide. A defendant bears the evidential burden of proof in relation to this defence.
1.91The Scrutiny Committee noted the rationale provided in the Explanatory Memorandum for the proposed reversal of the evidential burden of proof. The Scrutiny Committee also noted that:
…the Guide to Framing Commonwealth Offences provides that a matter should only be included in an offence-specific defence (as opposed to being specified as an element of the offence), where:
it is peculiarly within the knowledge of the defendant; and
it would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter.
1.92However, the Scrutiny Committee considered that:
In this instance, it is not apparent from the explanatory materials whether the matters in proposed subsections 952E(4A) and 952G(11) are matters peculiarly within the defendant's knowledge, or that it would be significantly more difficult or costly for the prosecution to establish the matters than for the defendant to establish them.
1.93Given the above, the Scrutiny Committee requested advice from the Minister on ‘why it is necessary and appropriate for the offence-specific defences proposed within items 44 and 45 of Schedule 1 to reverse the evidential burden’.
Parliamentary Joint Committee on Human Rights
1.94The Parliamentary Joint Committee on Human Rights reported that it had no comment on the bill.
Conduct of the inquiry
1.95The committee advertised the inquiry on its website and wrote to a range of stakeholders to invite them to make a submission by 23 February 2026.
1.96The committee received 14 submissions, as listed at Appendix 1.
Acknowledgments
1.97The committee extends its thanks to the individuals and organisations who contributed to the inquiry by making substantial written submissions.