AUSTRALIA Law and Practice Contributed by: Steven Pettigrove, Katrina Sharman, Luke Higgins and William Deeb, Piper Alderman
• custody and platform services, where an operator holds or controls crypto-assets on behalf of clients; • exchange and transfer services, including fiat- to-crypto exchanges and broader “virtual asset service provider” (VASP) activities; and • payment–related services, including stablecoin issuance or arrangements. There are no blanket prohibitions on crypto-asset activities in Australia. However, activities may be effectively restricted where: • a business operates without required licences or registrations (eg, AFSL or AUSTRAC registration); • conduct involves misleading or deceptive repre- sentations, fraud or market misconduct; or • products expose retail investors to risks without satisfying disclosure and licensing obligations. Retail Versus Wholesale Customers Australia imposes a distinction between retail and wholesale customers: • where a crypto-asset is a financial product, retail client protections apply (eg, disclosure obligations, best interests duty, design and distribution obliga- tions); • wholesale client tests under the Corporations Act determine whether a client is treated as retail or wholesale. Regulatory Transitions Australia is undergoing a significant regulatory tran- sition. Key developments have been outlined below. • Reforms under the AML/CTF Act came into force on 31 March 2026, with a series of targeted transi- tional measures to ease implementation for existing reporting entities. • ASIC’s no action position, a transitional measure under which ASIC will not take enforcement action for certain unlicensed digital asset services where a business lodges an AFSL (or variation) application by 30 June 2026, complies with specified condi- tions while that application is assessed. • The commencement of the DAF Act on 8 April 2027. This will introduce: (a) licensing for DAPs and TCPs;
(b) tailored custody, disclosure and operational standards; and (c) integration of crypto-asset intermediaries into the AFSL framework. • Consultations on draft payments legislation mod- ernisation are underway, with the aim to bring in a broader range of Payment Service Providers (PSP) within the AFSL framework, enhanced prudential oversight powers for the Australia Prudential Regu- lation Authority (APRA) in respect of major stored value facility (SVF) providers and the introduction of a broad rule making power to support the imple- mentation of a mandatory, revised “ePayments Code”. These reforms are intended to close regulatory gaps, improve consumer protection and align Australia more closely with international standards, while maintaining its technology neutral regulatory approach. 2.3 Regulated Firms and Legal Wrappers The use of a legal wrapper, such as a fund, can materi- ally change the analysis in 2.2 Crypto-Asset Regula- tory Frameworks. While direct investment in crypto-assets may fall outside the financial product regime (depending on the asset’s characteristics), investment via a pooled vehicle (such as a fund that carries out purchases of crypto-assets) typically will constitute an interest in a managed investment scheme (MIS) or another financial product. ASIC’s updated Information Sheet 225 (INFO 225) confirms that digital asset arrange- ments involving pooled investment and reliance on a promoter are commonly characterised as facilities for making a financial investment or MIS interests. As a result, the investor’s interest becomes the regu- lated financial product, bringing the arrangement with- in the Corporations Act. The responsible entity must hold an AFSL and comply with licensing, governance and operational obligations. Custody requirements are governed primarily by Regulatory Guide 133, which sets minimum standards for asset holding, including crypto-assets that are financial products. Funds must also meet disclosure and conduct obligations, includ- ing issuing a:
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