On March 21, the Australian Treasury published plans for regulating digital assets and payment stablecoins, focusing on platforms that have custody of client assets and stablecoin issuers.
According to the Treasury, the “fit for purpose” digital asset regime will aim to increase transparency, protect consumers, help Australia adopt and benefit from new technology, and keep the country competitive globally.
“Digital assets are a rapidly evolving part of the economy, offering opportunities for new products and productivity gains. The potential benefits of these assets are far reaching, from streamlining payments systems to transforming how we invest and do business,” read the Treasury paper.
It added that the government’s approach would “help industry to identify opportunities and manage risks, unlock innovation, protect consumers and uphold market integrity. By aligning with international best practice, Australia can boost the global competitiveness of our digital asset sector.”
The Treasury said it would also work with the Australian Securities and Investments Commission (ASIC) “to ensure there are appropriate transitional arrangements ahead of the Government’s legislative reforms coming into effect.”
Australia’s plan
The paper broke the Australian government’s approach to digital asset reform down into four “primary elements”:
- A framework for Digital Asset Platforms (DAPs), described as online platforms that hold digital assets for consumers;
- A framework for payment stablecoins, which will be treated as a type of Stored-Value Facility (SVF)—funds loaded onto an account or facility—under the Government’s Payments Licensing Reforms;
- Undertaking a review of the ASIC’s Enhanced Regulatory Sandbox;
- And a suite of initiatives to explore “ways to safely unlock the potential benefits of digital asset technology across financial markets and the broader Australian economy.”
The focus will initially be on DAP operators. Specifically, those providing common digital products with an underlying custody arrangement, including trading platforms, custody products, and some brokerage arrangements.
Local or foreign companies providing services such as operating and dealing in DAPs and issuing and redeeming tokenized SVFs will also be included.
Obligations
Firms covered by the DAP framework must comply with the general obligations imposed on all financial service providers, such as “providing services honestly, fairly, and efficiently,” as well as avoiding conflicts of interest and meeting minimum capital requirements.
Companies classified as DAP operators must also comply with rules to safeguard customer assets. These will be based on existing “client monies” rules and minimum standards for custodial and depository services.
Further, firms covered by the regime will have additional tailored requirements for the redemption of “stored value represented by tokens,” as well as disclosure rules for digital assets without issuers and reserve composition.
Future developments
In addition to outlining the framework for DAPs, the Treasury provided a roadmap for its future digital asset regulatory plans.
This included instituting a Crypto Asset Reporting Framework (CARF) to help address tax evasion by providing an international standard for revenue authorities to exchange information on users’ digital asset tax transactions. The Treasury said it was considering stakeholder feedback from a recent CARF consultation paper from November 2024.
The Treasury also announced that it was working with the Reserve Bank of Australia (RBA)—the country’s central bank—to explore the “feasibility and potential benefits” of an Australian dollar central bank digital currency (CBDC). The pair released a joint report in September last year summarizing their research on the potential CBDC.
According to last week’s Treasury paper, “the report highlighted that while a clear public interest case is yet to emerge to issue a retail CBDC, issuing a wholesale CBDC could play an important role in enhancing the functioning of wholesale markets in Australia.”
On the trending topic of tokenization, the Treasury said it was working with the ASIC, Australian Prudential Regulation Authority (APRA), the RBA, and the Digital Finance Cooperative Research Centre (DFCRC)—an industry group focused on digital asset research—to trial the use of tokenized money (including CBDCs and stablecoins) for the settlement of transactions in wholesale tokenized asset markets.
The DAP framework and future roadmap are all high-level plans; as such, the Treasury did not provide any specific dates for their possible implementation.
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