Earlier this month, the government released a draft for consultation of the proposed Payment Systems Modernisation Bill, which would formally bring stablecoins into the payments system.

The bill would allow stablecoins to have their own set of rules and a defined, fit-for-purpose market structure, rather than being forced into frameworks that are not designed for digital currencies.

ASIC’s updated guidance said stablecoins, wrapped tokens, tokenised securities and digital asset wallets were among the digital asset products it considered financial products.

Alan Kirkland, deputy commissioner for ASIC, said distributed ledger technology and tokenisation were reshaping global finance, and the guidance provided the regulatory clarity that firms have been calling for to innovate confidently in Australia.

“Many widely traded digital assets are financial products under current law – and will remain so under the government’s proposed law reform – meaning many providers require a financial services licence,” Kirkland said.

“Licensing ensures consumers receive the full suite of protections under the law and allows ASIC to act when poor practices lead to harm.”

He continued that ASIC recognised that firms would need time to consider the updated guidance and apply for licences, so it had granted a sector-wide no-action position until 30 June 2026.

It also proposed to provide relief for stablecoin and wrapped token distributors to smooth the transition to the proposed law reform.

Banton said as digital assets continue to evolve beyond traditional cryptocurrencies to encompass stablecoins, wrapped tokens, tokenised securities, and digital wallets, ASIC’s recognition that many of these instruments meet the definition of financial products under current legislation is both timely and significant.

“This clarity empowers ASIC to act decisively when poor practices or misaligned incentives place SMSF investors at risk,” she said.

“As a founding member of the SMSF Innovation Council, we strongly endorse ASIC’s leadership in aligning innovation with investor protection. This guidance represents not just regulatory progress, but a blueprint for how Australia can foster digital asset innovation responsibly, transparently, and with the integrity our financial system demands.

“We look forward to collaborating across the sector to translate this framework into meaningful outcomes for SMSF trustees and the broader investment community.”

Drew Bradford, CEO of Macropod, said the bill and ASIC’s updated guidance were exactly the clarity for which the industry had called.

“It’s now up to the industry to engage with the government’s consultation process to ensure the legislation is suitable and workable,” Bradford said.

AFCA said that the updated guidance from ASIC requiring digital asset businesses to have an AFSL means vital consumer protections were extended to investors of cryptocurrency and digital assets.

Shail Singh, AFCA’s lead ombudsman for investments and advice, said it expected that better regulation would reduce fraud and security issues, and also meant cryptocurrency platforms would need to have internal dispute resolution processes for their customers.

“Consumers will also have the right to come to AFCA, as an independent umpire, if they can’t resolve a dispute with a licensed firm,” Singh said.

Until now, cryptocurrency was not regulated as a financial product under the Corporations Act, so providers of cryptocurrency or digital assets were generally not required to be members of AFCA's external dispute resolution scheme.

However, some chose to be voluntary members or were members under a condition of an industry association.

In the 2024–25 financial year, AFCA received 159 complaints about cryptocurrency firms that were voluntary members.

The top three issues were scams, interpretation of product terms and conditions and failure to act in a client’s best interest.

Singh said AFCA would work with digital asset businesses to ensure a smooth transition to the new arrangements.