Australia financial regulator ASIC has put out its long-awaited proposals for regulating the crypto industry, issuing a Consultation Paper (CP 381) inviting feedback on proposed updates to digital asset guidance.

ASIC seeks feedback on its proposals and the issues raised in CP 381 by the end of February 2025. The regulator intends to publish a final version of its rules in mid-2025, after considering feedback received through the consultation process.

To provide greater clarity about the current law, ASIC has proposed a range of updates to INFO 225 first issued in late 2021, including adding 13 practical examples of how the current financial product definitions apply to digital assets and related products.

ASIC Commissioner Alan Kirkland said,

“We want to promote the growth of responsible financial innovation while ensuring consumer protection. A well-regulated financial system benefits everyone in the community as it supports consumer confidence, market integrity and facilitates competition and innovation.

“Australia’s financial services regulatory regime is broad and technology neutral. Many digital assets and related products are financial products under the current law. Stakeholders have been calling for greater clarity and in response, we are releasing our draft updated guidance.

“We encourage all stakeholders to engage with the consultation process. We recognise that industry will need some time to consider and act on our updated guidance, so we are also consulting on a proposed transitional approach.”

Generally, ASIC said that its existing approach to financial services licenses will apply to digital assets. For example, whether an applicant is proposing to deal in traditional securities or securities based on a digital asset platform, the same licensing regime applies.

ASIC’s CP 381 seeks feedback on:

• ASIC’s updated guidance in INFO 225, including the worked examples,
• the application of the existing Australian Financial Services (AFS) license processes, ASIC guidance and standard conditions to digital asset businesses,
• practical licensing issues for wrapped tokens and ‘stablecoins’, issues arising from the potential transition to the Government’s proposed digital asset platform and payment stablecoins regimes, and consideration of potential regulatory relief, and
• a potential class ‘no action’ position for digital asset businesses that are in the process of applying for or varying an AFS license, Australian Markets License or Clearing and Settlement Facility license.

ASIC said it will continue to use its full range of regulatory and enforcement tools, such as guidance, licensing, compliance and enforcement action, to protect consumers and uphold market integrity in the digital asset sector.