On 4 December 2024, ASIC released a Consultation Paper outlining its proposal to update Information Sheet 225 Crypto Assets (“INFO 225”) to provide additional guidance on how the financial services law applies to cryptocurrencies and other digital assets. Importantly, the Consultation Paper does not cover the new regulatory regime for digital asset facilities and digital asset platforms proposed by Treasury in October 2023, and does not impose any new requirements or obligations.
Worked Examples
The proposed updates to INFO 225 include the addition of 13 worked examples that serve to demonstrate how particular digital assets could satisfy the definition of a ‘financial product’. These digital assets include yield-bearing stablecoins, gold asset referenced tokens, tokenised securities and contracts for difference over digital assets. In providing these examples, ASIC notes that it is essential to consider each of the features, benefits and rights inherent to, attaching to and being offered together with a digital asset when assessing whether it constitutes a financial product.
No-Action Position
ASIC shares that it is considering taking a no-action position on licensing breaches for digital asset businesses that are in the process of applying for, or applying to vary, an Australian Financial Services Licence, an Australian Market Licence or a Clearing and Settlement Facility Licence. ASIC is seeking feedback on the idea and on the conditions that businesses would need to satisfy for the no-action position to apply to them (for example, ASIC has suggested that businesses would need to be members of AFCA to qualify).
Wrapped Tokens and Stablecoins
The Consultation Paper calls for stakeholder feedback on ASIC’s view that that certain wrapped tokens satisfy the definition of a ‘derivative’ and certain stablecoins satisfy the definition of a ‘non-cash payment facility’. ASIC would like to understand the practical implications of such an interpretation before introducing examples into INFO 225 that cement its position.
Regulation Generally
ASIC is also calling for feedback on its regulation of digital assets generally, for example:
whether financial products involving digital assets should be regulated in the same way as financial products not involving digital assets;
whether any ASIC guidance needs to be amended to accommodate financial products involving digital assets; and
what ASIC should take into account when assessing whether a person relying on Option 5 of RG 105 has appropriate knowledge and skills in relation to a financial product involving digital assets.
The Consultation Paper and draft updated INFO 225 can be accessed here.
Consultation closes on 28 February 2025. Submissions can be sent to: digital.assets@asic.gov.au.
ASIC intends to publish an updated version of INFO 225 by mid-2025.
If you have any questions in relation to the above, please contact Cowell Clarke’s Financial Services Team at Compliance@CowellClarke.com.au.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.