The future state of play: Australia’s proposed digital asset regulation
After years of consultation, Treasury has finally released a draft bill on the regulation of digital assets.
Key Takeaways
A draft bill on digital assets has been released.
The proposed bill capitalises on stakeholder support built through the consultation process, addresses regulatory gaps and establishes a framework to encourage innovation.
Two new financial product categories have been introduced: Digital Asset Platforms (DAPs) and Tokenised Custody Platforms (TCPs) which come with associated licensing and disclosure obligations.
How we got here
Info Sheet 225 ‘Crypto-assets’ was initially issued by ASIC in September 2017 and has long been the guiding framework for the application of financial services law to digital assets. ASIC has continually updated its guidance to modernise its approach, but there remained persistent regulatory gaps and uncertainty in the market. There have been a range of consultations over the years that have sought to improve the regulatory balance:
In March 2022, Treasury released the ‘Crypto Asset Secondary Service Providers’ consultation paper. This proposed three different regulatory options; with stakeholder engagement indicating that leveraging the existing financial services laws was the most appropriate avenue.
In February 2023, Treasury released the ‘Token Mapping’ consultation paper. It identified potential gaps under the existing regime but recommended against a new taxonomy for those assets. Stakeholders agreed with this recommendation.
In October 2023, Treasury released the ‘Regulating Digital Asset Platforms’ proposal paper; introducing the idea of a new type of financial product called a ‘digital asset facility’ (which had broad stakeholder support).
The three iterations of consultation have informed the regulatory approach in the proposed bill. The bill seeks to address the regulatory uncertainty by establishing a framework to capitalise on stakeholder support for the ideas in the consultation papers. This change represents a notable shift in tone from the previous passive approach that pushed the risk on digital asset intermediaries to identify what regulation applied to them.
What’s proposed?
On 25 September 2025, the Australian Government released the exposure draft of the Treasury Laws Amendment (Regulating Digital Asset, and Tokenised Custody, Platforms) Bill 2025 (Draft Bill).
Two new financial product categories have been introduced: Digital Asset Platforms (DAPs) and Tokenised Custody Platforms (TCPs) which come with associated licensing and disclosure obligations.
DAP: A product where an operator holds digital tokens on behalf of clients (e.g. a digital asset custodian and exchange).
TCP: A product where an operator holds underlying assets (of any type) and creates tokens to identify the people who can redeem or direct the delivery of those assets (e.g. tokenised physical asset platforms or intangible asset platforms). Put another way, these tokens represent interests in the underlying assets. If the underlying products are financial products, those interests are also financial products.
Why are platforms the focus?
DAPs and TCPs allow the platform, not the investor, to hold the digital or underlying asset. The platform assumes counterparty risk, which can make transacting safer for individuals. However, this structure exposes individuals to failures of digital asset intermediaries (e.g. FTX’s collapse in November 2022). For this reason, Treasury chose to focus on regulating digital asset intermediaries rather than the digital assets themselves.
What obligations will apply?
General and tailored obligations apply under the Draft Bill. A few key reforms include:
AFS licensing obligations for operators of DAPs and TCPs, subject to limited exemptions (e.g. total market value of transactions do not exceed $10m over a 12-month rolling period and the operator holds less than $5,000 per customer).
Clients must receive the same disclosure about the underlying assets that they acquire through a DAP and TCP from the issuer as if they acquired those assets directly. However, new disclosure obligations via DAP/TCP Guides will touch on the platforms’ transactional and settlement functions as well as the arrangements for holding client assets – this is in place of duplicative Product Disclosure Statements.
New powers for the Minister and ASIC to classify or restrict certain activities surrounding DAPs – this creates flexibility around regulating non-financial products particularly where they present systemic risks.
The full suite of existing customer protections and enforcement powers will apply to the services provided by operators of DAPs and TCPs (i.e. misleading and deceptive conduct, unfair contract terms, DDO).
What’s different now?
The increased sophistication in how digital assets are described in the reforms promotes regulatory clarity. The guidance recognises that some digital asset arrangements do not have the features of a typical financial product issuer or service provider (meaning that existing regimes may be difficult to reconcile). This gap has been challenging for many in the space and the guidance seeks to address this issue. For example, the guidance expressly states that public and permissionless networks such as the Bitcoin and Ethereum Networks, and their associated consensus mechanisms, are not financial products. This kind of certainty has not been apparent in regulation since early iterations of ASIC’s Info 225 that were subsequently removed. The reforms also touch on other arrangements in the ‘grey area’ including staking, wrapping, and DeFi amongst others.
Consultations close on 24 October 2025.
We are hopeful that the incorporation of stakeholder views over previous consultations and the enhanced sophistication of the reforms will lead to a short response period and imminent regulatory certainty.
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.
