Australia expands virtual-asset oversight across the board…finalizes inclusive 'digital asset' guidelines

On the 29th (local time), according to Decrypt, ASIC released a revised edition of Info Sheet 225, expanding the applicable cases from 13 to 18 compared with last year's draft and newly adding custody, fund management, and moratorium provisions. The revision uses the term 'digital asset' instead of the previous 'crypto-asset' to encompass all forms of virtual assets such as stablecoins, utility tokens, and tokenized securities.

ASIC said the guidance does not create new laws but is designed to allow the industry to prepare in advance for compliance, taking into account consistency with the Digital Asset Platforms and Payment Service Providers Bill that the Treasury is expected to announce in the second half of this year. That bill is expected to introduce a formal licensing regime for exchanges, custody providers, and stablecoin issuers.

The new guidelines treat staking, interest-bearing tokens, and asset-linked stablecoins as 'financial products' and state that an Australian Financial Services (AFS) license is required to deal with them. They also specifically classify tokenized products, exchange-issued tokens, game-type NFTs, and staking services, providing criteria to determine whether each asset falls into categories such as 'managed investment products', 'derivatives', or 'non-cash means of payment'.

In particular, firms performing custody services are subject to a new net liquid asset requirement of up to AUD 10 million (approximately USD 6.5 million). However, ASIC noted that exceptions may be allowed where custody functions are incidental. ASIC also reiterated that Australian law applies to offshore and decentralized structures and warned that global platforms serving local users cannot evade regulation based on geographic location.

The guidance follows on from the 'class relief' measure in September, when ASIC exempted stablecoin intermediaries from duplicate licensing obligations. That measure was a temporary relaxation allowing the distribution of a licensed issuer's stablecoins when brokering them without a separate market or clearing authorization.

Meanwhile, the Treasury is pursuing comprehensive legislation this year that includes a digital asset platform and payment licensing regime, aiming to codify the supervisory framework for exchanges and custody providers. Alongside this, ASIC has additionally set out risk management, disclosure, and custody standards for issuers of digital asset funds and exchange-traded products (ETPs).

However, authorities avoided a blanket definition of decentralized finance (DeFi), stating that "whether licensing obligations apply will depend on participants' roles and structures." ASIC indicated it will work with AUSTRAC, the Australian Prudential Regulation Authority (APRA), the Australian Taxation Office (ATO), the Australian Competition and Consumer Commission (ACCC), and the Reserve Bank of Australia (RBA) to build an integrated supervisory framework.