ASIC Tightens Oversight of Digital Assets Confirms AFS Licensing Requirement

Highlights

• ASIC confirms that stablecoins, wrapped tokens, tokenised securities, and digital asset wallets are classified as financial products.
• A sector-wide no-action position is in place until 30 June 2026 to allow businesses time to meet licensing requirements.
• The regulator confirmed that many digital asset providers will need to hold an Australian Financial Services (AFS) licence.

The Australian Securities and Investments Commission (ASIC) has released updated guidance on how existing financial laws apply to digital assets, aiming to protect investor while providing clearer operational parameters for digital asset businesses. The regulator also confirmed transitional measures ahead of the Australian Government’s proposed digital asset reforms.

ASIC Expands Digital Asset Definition

In its updated INFO 225: Digital Assets – Financial Products and Services, ASIC outlined that several commonly traded digital assets fall within the existing definition of financial products under Australian law. This includes stablecoins, wrapped tokens, tokenised securities, and digital asset wallets.

ASIC Commissioner Alan Kirkland said that the new guidance is designed to help firms understand their obligations under current law. He noted that digital technologies are reshaping global financial systems, and that clearer regulation will support innovation and consumer protection in equal measure.

The regulator confirmed that many digital asset providers will need to hold an Australian Financial Services (AFS) licence to continue operations, ensuring that investors receive protections such as dispute resolution and disclosure requirements.

Transitional Measures and Relief Proposals

To support compliance, ASIC introduced a sector-wide no-action position effective until 30 June 2026, giving businesses time to assess their obligations and, if required, apply for licences. The commission also announced its intention to provide regulatory relief for certain distributors of stablecoins and wrapped tokens, as well as for custodians holding digital assets deemed to be financial products.

Feedback on these proposed relief instruments is open until 12 November 2025, with ASIC encouraging submissions from industry stakeholders. The regulator stated that while it will consider the no-action position in reviewing historical conduct, it will continue to take enforcement action where significant consumer harm or systemic misconduct occurs.

Guidance Informed by Industry Consultation

The update follows ASIC’s Consultation Paper 381 (CP 381), released in December 2024, which sought industry feedback on clarifying the classification of digital assets and on potential transitional measures. Responses to that consultation informed both the new guidance and ASIC’s decision to provide interim relief.

The revised INFO 225 also aligns with the Government’s proposed Digital Assets and Payments (DAP) reforms, offering complementary regulatory direction until new legislation is enacted.

Supporting Innovation Through Clarity

ASIC noted that the updated framework builds on earlier practical measures, including regulatory support for the Reserve Bank of Australia’s Project Acacia—a research initiative on wholesale tokenised asset markets—and relief for licensed distribution of specific stablecoins.

First published in 2017, INFO 225 has been updated multiple times to keep pace with evolving technology.