AUSTRALIA Trends and Developments Contributed by: Steven Pettigrove, Katrina Sharman, Luke Higgins and William Deeb, Piper Alderman
Conclusion and Practical Implications The DAF Act and the amended AML/CTF Act are designed to operate as complementary pillars of the new digital asset regulatory architecture, with ASIC overseeing conduct and consumer protection through the AFSL regime and AUSTRAC overseeing financial crime risk through the VASP regime. Most digital asset exchanges and custodians will likely sit squarely within both regimes, meaning that licensing analysis under the Corporations Act and registration analysis under the AML/CTF Act must be undertaken in par- allel rather than sequentially. The two regimes share common themes, such as governance accountabil- ity, risk-based oversight and the centrality of custody and intermediation, but impose distinct obligations that will need to be reflected across the compliance framework. As most cryptocurrency exchanges and custodians are now categorically within the mainstream finan- cial services regulatory perimeter, they are subject to AFSL requirements and general obligations such as acting efficiently, honestly and fairly. Both the DAF Act and the amended AML/CTF Act also impose specific obligations on digital asset businesses. In practice, firms will need to assess whether an AFSL is required, update AUSTRAC registrations to reflect new desig- nated services, uplift AML/CTF and licensing frame- works, implement enhanced disclosure processes and potentially reconsider product offerings and dis- tribution models.
in civil penalties on BPS Financial and a ten-year restriction on providing financial services without an AFSL. The case confirms ASIC’s willingness to pursue significant penalties where crypto busi- nesses engage in unlicensed financial services and misleading conduct and signals that digital asset products will be regulated under existing financial services laws. • ASIC v Web3 Ventures Pty Ltd : The High Court has granted ASIC special leave to appeal a Full Federal Court decision that found Block Earner did not require an AFSL to offer its fixed–yield crypto product. ASIC is seeking clarification on the scope of the statutory definition of “financial product”, including whether loan and fixed interest arrange- ments fall within the regulatory perimeter. The High Court has also granted special leave to rule on whether bitcoin can be property, following the Full Court of the Supreme Court of Tasmania’s deci- sion in Poulton v Conrad , which, in obiter, endorsed the establishment of a third category of property for crypto-assets. The decision suggested that control via private keys may be sufficient to establish possession of intangible property.
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