Australian Regulator Signals Broader Digital Asset Oversight Ahead of New Licensing Regime

Core Viewpoint - Australia's markets regulator, ASIC, is enhancing its regulatory framework for digital assets, indicating that many digital assets qualify as financial products under existing laws [1][3]. Group 1: Regulatory Changes - ASIC is revising its Information Sheet 225 to expand the definition from "crypto assets" to "digital assets," providing 13 examples of when various tokens and products require financial services licenses [2]. - The regulator's guidance aligns with the Treasury's upcoming Digital Asset Platforms and Payment Service Providers bills, which will formalize licensing for exchanges, custodians, and certain stablecoin issuers [3][6]. Group 2: Specific Asset Classifications - ASIC has identified that fiat-backed stablecoins may be classified as non-cash payment facilities, while wrapped tokens could be considered derivatives, both necessitating Australian Financial Services (AFS) licensing [4]. - The commission emphasizes that Australian law applies to offshore and decentralized structures marketed to local users, ensuring that global platforms cannot evade regulatory oversight based on geography [4]. Group 3: Custodial Obligations - New custodial obligations require firms holding client assets to meet net tangible asset thresholds of up to 10 million Australian dollars (approximately US$6.5 million), unless their custody role is incidental [5]. - ASIC is providing a transitional "no-action" period for companies seeking the necessary licenses after the guidance is finalized, but it has indicated that enforcement expectations are increasing [5].