AUSTRALIA Law and Practice Contributed by: Steven Pettigrove, Katrina Sharman, Luke Higgins and William Deeb, Piper Alderman
Transitional/Grandfathering Arrangements Australia is currently operating a transitional regime to comply with new AFSL reforms, specifically ASIC’s no action position, a transitional measure under which ASIC will not take enforcement action for certain unli- censed digital asset services where a business lodges an AFSL (or variation) application by 30 June 2026 and complies with specified conditions while that applica- tion is assessed. The position extends to certain mar- ket operators and clearing and settlement facilities. Separately, ASIC has outlined a transition pathway under the DAF Act, with staged implementation peri- ods (including an anticipated transition window of approximately 18 months) to allow businesses to become fully licensed. 3.2 Set-Up Requirements Application Process • Lodgement of an Australian Financial Services Licence (AFSL) application with the Australian Securities and Investments Commission (ASIC), specifying the financial services and product authorisations sought. • Submission of detailed supporting materials, including: (a) business plan and proposed activities; (b) compliance and risk management frameworks; and (c) organisational competence and governance arrangements. • ASIC assesses whether the applicant can provide services “efficiently, honestly and fairly” and com- ply with ongoing obligations under the Corpora- tions Act. Substance Requirements • Demonstration of organisational competence, typi- cally through: (a) appointment of Responsible Managers with relevant financial services expertise (and, for crypto businesses, understanding of underlying technology); (b) clear governance structures, internal controls and reporting lines; and (c) documented compliance policies and proce- dures.
• Evidence of a genuine, ongoing business, including operational capability and systems. Local Presence/Personnel ASIC will expect the appointment of responsible man- agers who understand the local regulatory regime. Overseas persons or experience may be accepted provided that sufficient organisational competence is established. Outsourcing and intra-group support are permitted; however, full responsibility for compliance and super- vision rests with the licence holder. Prudential and Operational Requirements Licensees must maintain: • adequate financial, technological and human resources; • effective risk management systems and internal controls; • appropriate custody and client asset protection arrangements; and • dispute resolution systems and disclosure pro- cesses. Crypto-Specific Considerations Under the DAF Act, exchanges, custodians and plat- form operators must obtain an AFSL and meet addi- tional requirements (eg, asset–holding standards, governance and disclosure obligations). 3.3 Change of Control Digital asset firms in Australia are subject to gener- al laws governing changes in control, including the Competition and Consumer Act 2010 (Cth) and the Foreign Acquisitions and Takeovers Act 1975 (Cth). Where a firm holds an AFSL, any controllers, officers and responsible managers must satisfy ASIC’s “fit and proper person” requirements. In addition, reporting entities under the AML/CTF Act must notify AUSTRAC of changes to key personnel, including beneficial owners and senior officers. From 31 March 2026, there is an additional requirement that the firm’s money laundering reporting officer be ordi- narily resident in Australia.
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