Australia is taking its next active steps to strengthen the licensing, conduct and consumer protection framework for digital asset services. The proposals could have widespread impacts for traditional financial sector participants, the highly innovative crypto-asset sector and a broad range of other services.
On 25 September 2025, Australian Treasury released the Treasury Laws Amendment (Regulating Digital Asset, And Tokenised Custody, Platforms) Bill 2025 (Draft Bill) and related explanatory materials to regulate digital asset and tokenised custody platforms in Australia. The Draft Bill amends the Corporations Act 2001 (Cth) (Corporations Act) to bring digital asset platforms and tokenised custody platforms into the existing Australian financial services licence (AFSL) framework.
The Draft Bill is expansive. We expect the proposals to be of particular interest to centralised platform providers right through to decentralised infrastructure developers, but their reach is not limited to blockchain. Crucially, the Draft Bill does not override the existing regime for digital assets that are “financial products”, nor is it limited to blockchain-based assets and processes. The breadth of several concepts including “digital token” and “digital object” makes these proposals potentially relevant to multiple platforms that have nothing to do with Bitcoin or other blockchain-based assets.
Feedback is due on 24 October 2025.
In this alert, we provide the following:
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KEY TAKEAWAYS
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The 6 key things to know about the Draft Bill. |
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THE FINER DETAILS
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Further details on the proposed regulated activities and obligations. |
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BEYOND THE OBVIOUS
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A closer look at the key definitions that showcase the breadth of the Draft Bill and how it may apply beyond the average crypto exchange. |
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INTERACTION WITH OTHER REGIMES
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Where these new licences fit into the broader Australian regulatory environment for digital assets and other consultations in play. |
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ACTION STEPS
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Suggested action steps and focus areas. |
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The Draft Bill also builds upon the momentum of other Australian reforms occurring in tandem, making contextual review important.
Please do not hesitate to contact us if you have any questions.
Key takeaways
The Draft Bill contains significant detail, which is explained in depth with illustrative examples in the Explanatory Memorandum.
At a high level, here are the key things to know.
- New regulated activities. The draft legislation proposes to introduce two new categories of financial products under the Corporations Act:
- Digital Asset Platforms (DAPs)
- Tokenised Custody Platforms (TCPs)
Each of these requires a custodial component, but this is quite broadly conceptualised, as we explain below.
- Licensing implications. Anyone providing specified services in relation to DAPs or TCPs will be treated as providing a “financial service” and therefore be required to hold an AFSL and comply with licensing obligations.
- Regulator. ASIC will be the primary regulator, consistent with the existing AFSL regime.
- Conduct requirements. Platform operators will generally be required to comply with obligations under the existing AFSL regime, as well as new, targeted requirements, including the following:
- Minimum standards for asset-holding, transaction and settlement functions.
- Platform rules that deal with activities or conduct of persons in relation to the platform.
- Disclosure requirements, including the requirement to issue a Platform Guide.
- Exemptions and overlap. Targeted exemptions are proposed to avoid regulatory duplication and to reflect the distinctive risk profile of particular activities. However, for clarity, a DAP and TCP may also be required to hold other licences and registrations. For example, several services in relation to digital assets that are “financial products” are subject to the existing licensing regimes in the Corporations Act (more on this in Part D below).
- Feedback due date. Consultation on the exposure draft legislation closes on 24 October 2025. The consultation questions are available here.
The following paragraphs provide additional details.
The finer details
New financial products
The draft legislation leverages the existing AFSL regime by introducing two new types of “financial products”. These are summarised below, with additional detail below.
Anyone providing specified services in relation to DAPs or TCPs will be treated as providing a financial service, subject to certain exemptions. Three of the key implications are as follows:
- Activities such as advising on, dealing in, or arranging for others to deal in, DAPs or TCPs will be regulated.
- Providers of these services will be required to hold an AFSL and comply with licensing obligations.
- Certain services are limited to constitutionally-covered corporations.
Minimum conduct standards
Operators of DAPs and TCPs will need to comply with new minimum standards, to be developed by ASIC. These will focus on two areas:
- the platform’s transaction and settlement functions; and
- the platform’s arrangements for holding client assets.
Disclosure
Operators will also be subject to a tailored disclosure regime designed to ensure clients receive the same disclosure about the underlying assets they acquire through a DAP or TCP as they would have received if they had acquired those assets directly.
This includes issuing:
- a DAP/TCP Guide (Platform Guide), which replaces the obligation of other types of AFSL holders to provide a product disclosure statement; and
- Platform Rules, as a contract between the operator and each client.
In summary, these documents are required to address the following key areas, among others.
There are other disclosure-related rules, including in relation to:
- voting and governance-related rights; and
- communications relating to underlying assets and certain prescribed digital tokens.
General obligations and oversight by ASIC
As an AFSL holder, the reforms will bring operators of DAPs or TCPs, as well as entities providing financial services related to these products, under ASIC’s regulatory authority. This means they will be expected to comply with ASIC’s guidance and will be subject to ASIC’s extensive powers, including its ability to issue product intervention orders.
Exemptions
The reforms relieve DAP and TCP operators from certain obligations to avoid regulatory duplication and mitigate certain risks. In most cases, the relief replicates existing relief provided to similar products issued under the existing frameworks.
There are also important proposed exemptions from the new licensing regime, as well as carve-outs to the existing scope of financial services regulation that we expect will provide valuable clarity to the market.
The following chart summarises these as follows, but we stress the detail is important. It is vital to review the criteria for each.
There are several additional exclusions and nuances, some of which are covered in the next paragraph.
Beyond the obvious – a closer look at key concepts and definitions
A striking detail of the Draft Bill is that it eschews a mere cut-and-paste of other Australian statutory definitions such as “virtual asset” in the updated Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CFT Act).
Furthermore, the Draft Bill does not refer to blockchain, distributed ledgers or even cryptography, unlike regimes in several other major markets. Indeed, the Fact Sheet accompanying the Draft Bill refers to its approach being “technologically neutral, so it can adapt as new forms of tokenisation and services emerge”, as well as “futureproofing”.
Key definitions setting wide parameters
We set out below the key definitions that form the foundation of the DAP and TCP regimes.
The cumulative effect is that there is significantly more to the Draft Bill than immediately meets the eye. This may have consequences for broad segments of the digital (and even non-digital) economy.
The “wrapped token” clarification
Finally, section proposed section 765E of the Draft Bill includes a special provision that seeks to clarify that certain tokens commonly referred to as “wrapped tokens” are not “financial products” for the purposes of the Corporations Act.
There are several conditions to this exemption. Helpfully:
- paragraphs 1.151 to 1.160 of the Explanatory Memorandum explain the intended operation of this express exemption; and
- paragraph 5 of the Appendix to the Explanatory Memorandum also provides a worked example in relation to a tokenised bond.
Interaction with existing regimes
If implemented, the Draft Bill will operate alongside several other regimes.
This can mean, for example, that a given platform could require multiple licences and registrations if, for example, it offers a mix of tokens, some of which are “financial products” and some of which are not. Importantly, as token attributes can change over time, so can their regulatory characterisation.
All of this poses interesting operational questions that we expect may be a focus for many major platforms operating, or making plans for launch, in Australia.
In the table below, we summarise at a high level the existing regulatory framework applying to digital assets.
Australia is also taking steps to implement the UNCITRAL Model Law on Electronic Transferable Records. This is also highly relevant to digital objects and digital tokens. Further details are available here.
Action steps
Submissions in response to the draft legislation are due to Treasury by 24 October 2025.
As market participants prepare to respond, we suggest the following:
- Read the Explanatory Memorandum. This contains significant detail about the intended scope and operation of the Draft Bill.
- Consider the impact for your business and operating model. For example, are there any operational challenges that could be addressed either in the Draft Bill or in ASIC-set standards that would be valuable to raise?
- Consider providing feedback on the statutory drafting. Would any fine-tuning changes or additional clarifications or exemptions be valuable, while addressing the policy drivers and intended changes described in the Explanatory Memorandum?
- Speak to us if you have any questions.
If you would like to discuss the Consultation Paper, or developments in the regulation of digital assets or financial services more generally, please do not hesitate to reach out to our team.
We would be delighted to support.
