Crypto, bitcoin, stablecoin regulated under first Australian digital assets legislation

The Digital Assets Framework represents a historic landmark in financial services law nationally. The intention is to modernise Australia’s digital asset regulatory regime, defining key concepts from platforms through to tokens, and providing the Australian Securities and Investments Commission (ASIC) and the Minister with powers to regulate these platforms.

The Bill extends the scope and application of the existing financial services framework to broaden regulation to crypto platform service providers that have, until now, operated without regulation. Of the approximately 400 crypto platforms registered in Australia, only 10 per cent are registered with ASIC.

Steven Pettigrove is a Partner at Piper Alderman, advising on financial services and fintech. He says, “The regime that’s proposed is firmly positioned within the AFSL framework, which means that investors and participants in this sector will benefit from all of the existing protections that Australians will be familiar with under the AFSL regime. In addition, there’s a number of specific requirements and protections that recognise the unique features of digital assets.”

It’s a robust regulatory regime, one that is fit for purpose, Pettigrove tells LSJ Online.

The Bill, first introduced on 26 November last year, amends the Corporations Act 2001 (Cth) and Australian Securities and Investments Commission Act 2001 (Cth). The overhaul to Australia’s fintech legislation is inevitable considering global adoption of digital currencies and assets, along with the platforms to store and trade in these. The legislation aims to provide clarity around crypto-assets, stablecoins, tokenised securities, and decentralised finance (DeFi) platforms. In doing so, there is an acknowledgement by lawmakers that these digital assets are not beyond the financial services regulatory systems, since they ultimately serve the longstanding economic functions of any financial activities (capital allocation, payments), only via innovative technologies. The concerns from lawmakers, as with any introduction of new technologies, is to ensure adequate protections for consumers, approval for market operators within a competitive environment, and a system of oversight to protect the Australian market.

The Bill proposes to introduce:

• two new financial products, a digital asset platform (DAP) and tokenised custody platform (TCP); and
• a tailored regulatory regime to bring intermediaries in the digital asset space within the regulatory perimeter.

Businesses would have 18 months to comply with the new licensing and operational standards.

The DAP is an intermediary-operated facility that possesses clients’ digital tokens, and records client interests in an account, inclusive of exchanges, brokers, custodians and some wallet providers. According to the draft legislation ‘a non-transferable facility under which a person, defined as the operator, possesses one or more digital tokens on trust for or on behalf of another person, defined as the client, or another person nominated by the client’.

A TCP is ‘a non-transferable facility under which a person, defined as the operator, identifies one or more assets, 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 direct the delivery of, the underlying asset; and, the operator holds each underlying asset on trust for, or on behalf of, a person who possesses that digital token’.

As Dr Rhys Bollen, Senior Executive Leader, FinTech, wrote in a paper published on 11 March: “Viewed in historical context, the Digital Assets Framework Bill does not mark a radical departure from Australian financial regulation. Rather, it represents a Government decision that digital assets can be accommodated within existing legal concepts, supplemented by targeted adjustments as necessary.”

He went on to explain that: “Operators who possess digital tokens on behalf of clients will be subject to licensing, conduct, disclosure and asset-holding standards, reflecting the long-standing regulatory principle that custody creates fiduciary responsibilities irrespective of the technological medium.”

Michael Bacina is Co-founder of NXT Law and a highly experienced lawyer in the financial technology sector. He says that while treating digital assets much like existing financial products is “an elegant solution which dodges having to deal with a tricky question, it will be defended with justification that it levels the playing field with traditional businesses and digital asset businesses.”

However, he puts an alternate view forward.

“Digital assets are foundationally different and change the game, much as the email didn’t need a level playing field with traditional mail delivery. Forcing digital assets into a traditional playing field protects incumbents and strips away many of the benefits of decentralisation and the technology itself.”

He proffers the US as a comparison.

“US regulators have taken a very different path, deciding that 85 per cent of the crypto tokens by volume trading today are not securities, essentially accepting the argument the industry has been making for years in court.”

In his opinion, “The rest of the world will move into alignment with the largest market in the world and international regulators like IOSCO are likely to start to follow the US lead. The US SEC and CFTC’s sensible and practical guidance is filled with detail that lets innovators get to work and provides investors with confidence. It does not have the force of law, but shows how powerful policy leadership can be when put into very practical forms.”

Pettigrove says the key issue is around how the proposed legislation balances consumer protection and innovation.

“It works quite well from the consumer protection perspective, but a lot of the detail is quite broad, and a little bit vague in some areas, as to the types of activity that it’s intended to cover.”

Still, he says, “It’s quite clear that the legislation is intended to cover cryptocurrency exchanges, which is something that the industry’s called for. The bigger questions are around how it may catch the activities of software developers or participants involved in providing software applications that are used in decentralised finance or infrastructure providers in the ecosystem.”

According to the seventh annual Independent Reserve Cryptocurrency Index (IRCI) survey of approximately 2,000 Australians, in 2026:

• 33 per cent of Australians hold cryptocurrency, the highest in the survey’s history
• 30 per cent of investors reported that their bank had prevented or delayed them from buying cryptocurrency or sending money to a cryptocurrency exchange, up from 19.3 per cent in 2025

The IRCI survey found that 37 per cent of respondents aged 25 to 34 had reported bank blocks, and 35 per cent of respondents aged 18-24 had been blocked or delayed in transfer issues. It further found that:

• 71 per cent of crypto investors hold Bitcoin
• 62 per cent of crypto investors would have increased confidence in exchanges if they were licensed
• 57 per cent of Australian crypto investors report making a profit
• 73 per cent of Australians consider Bitcoin to be money, a store of value or an investment asset

The Independent Reserve is a cryptocurrency firm, so it obviously has an interest in the most optimistic reading of cryptocurrency adoption and usage in Australia. It is registered as a Digital Currency Exchange (DCE) and has operated since 2013.

Last year, YouGov were commissioned by an Australian cryptocurrency exchange, Swyftx, to conduct a similar survey. Their key findings included that “overall ownership of cryptocurrencies remained stable at 21 per cent of the adult population – a trend that we expect to continue until Australia has a settled policy environment, with legislated consumer protections for investors. Among Australians who have never invested in digital assets, the primary barrier to adoption remains a lack of trust and a concern that the asset class is not regulated (46 per cent). Worries over fraud also remain one of the top concerns (31 per cent) amid a continued focus on scam prevention by policy makers, law enforcement and industry.”

As the Treasury heard in February this year, The Bill does not define ‘digital asset’, rather it defines digital tokens, digital asset platforms (DAPs) and tokenised custody platforms (TCPs). DAPs and TCPs would be ‘financial products’ (unless they are managed investments) and would be subject to the general obligations of the financial services law (e.g. Australian Financial Services Licence (AFSL) and consumer protection requirements) and be subject to specific obligations, including minimum standards for asset holding and disclosure obligations tailored to reflect their structure and risk profile.

ASIC has provided comprehensive guidance on Australian financial services law to digital assets in its Information Sheet 225 (INFO 225). Ultimately, the guide does not convey new concepts of financial products but adapts and applies present definitions of ‘financial product’ and ‘financial service’ under the Corporations Act 2001.

Importantly, it emphasises the requirement for digital asset issuers of a financial product to comply with the Australian Financial Services (AFS) licensing requirements, subject to any exemptions. INFO 225 reads:

“If you are operating without a licence or without being an authorised representative of a licensee, you should be prepared to substantiate and justify why the digital asset(s) or related products or arrangements are not a regulated financial product (and why you are not undertaking a financial service or operating a market or clearing and settlement (CS) facility that requires a licence – see Part B and Part D). You should be able to justify this in relation to all aspects of your offering. For example, a project may in some circumstances feature multiple types of digital assets and involve one or more arrangements which may need to be assessed individually and then in combination.”

Bacina says, “The requirements around digital asset custody are extremely sensible and Treasury and ASIC should be commended for understanding the controls that are required to safeguard digital assets.  If nothing else was regulated, custody moves the needle.”

Still, it remains to be seen if other licensing requirements around insurance and capitalisation will strike the right balance, Bacina says.

“If too many operators are pushed out with onerous costs, then Australians will be the poorer for having restricted choice, and some will be attracted to scammers operating from foreign countries into Australia.”

The Tech Council of Australia claimed in 2022 that supporting a responsible digital asset sector could add up to $60 billion per year to gross domestic product (GDP) by 2030, reduce retail payment costs by 80 per cent by 2050, and save consumers $4 billion annually on international transaction fees.

As for the benefit this legislation provides immediately to Australian businesses and consumers, not for profits and government, Pettigrove says, “It will provide certainty to many who have been reluctant to engage in this sector. By providing a licensing framework for operators, it will allow consumers to more readily discern between unlicensed, overseas providers and onshore licensed providers, which is a critical and important change.”

As for whether or not it strikes the right balance in terms of providing an attractive regulatory regime to compete in international markets, he says, “There are major pieces of legislation moving through different international jurisdictions at the moment, and some of the questions around how this this regime will apply remains to be kind of fleshed out in regulations and later interpretation.”

This Bill is, Pettigrove says, a great start but there’s more work to do.

Further reading:

Corporations Amendment (Digital Assets Framework) Bill 2025 – Parliament of Australia

When history rhymes: regulating digital assets | ASIC