Fintech 2025

AUSTRALIA Trends and Developments Contributed by: Charmian Holmes, Jaime Lumsden, Michele Levine and Jessica Smith, Hamilton Locke

to involve the provision of regulated credit, mar - kets or clearing and settlement facilities which may trigger additional licensing and disclosure/ conduct requirements. ASIC has issued high level guidance in its INFO Sheet 225: Digital assets but following a recent spate of regulatory enforcement actions, ASIC issued Consultation Paper 381: Updates to INFO 225: Digital assets: Financial products and ser - vices (CP 381) in December 2024, to update its guidance on the regulatory perimeter for digital assets. More work is anticipated before the proposed updated regulatory guidance in INFO Sheet 225 is finalised, given that there are likely to be diverging views in the industry as to where the regulatory perimeter begins and ends. Following consideration of industry submis - sions, ASIC proposes to update its guidance and this is expected in the second half of 2025. In the meantime, regulatory uncertainty as to what digital asset products and services are currently caught by the existing regulatory regime pre - vails including what approach ASIC will take to regulatory enforcement. Without regulatory cer - tainty, Australia is at risk of falling behind global peers that are taking facilitative and innovative approaches to regulating the digital asset indus - try. Separately, the Department of Treasury is yet to release exposure draft legislation and regulations to implement the proposed digital asset facility and payment stablecoin reforms. The intent is that these reforms will only apply to digital asset products and services that do not involve the provision of any regulated financial services (ie, fall outside the current regulatory perimeter). It is believed that the Treasury intends to seek indus -

try feedback on the exposure draft in the second half of 2025. Treasury recently issued a state - ment titled ‘Developing an innovative Australian digital asset industry’ confirming this approach. AML/CTF reforms for payments providers and digital assets The Anti-Money Laundering and Counter-Ter - rorism Financing Amendment Act 2024 (Cth), introduced late last year, expands the regulatory requirements in the AML/CTF Act for payment providers, digital asset businesses and certain other higher risk industries, and has increased their obligations to detect and prevent financial crime. These changes were introduced to align Australia with standards set by the Financial Action Task Force (FATF), the global watchdog, and to ensure that Australia was not listed as “grey area” jurisdiction. The updated AML/CTF regime introduces the concept of “transfers of value” , being transfer of money, virtual assets and other property. Along with this notion of “transfer of value” , a new defi - nition of “digital currency” has been introduced which includes “virtual asset” aligning the defini - tions with global terminology set by the FATF. The impact of these changes is that more PSPs and digital asset businesses will be providing “designated services” and will need to comply with the AML/CTF regulatory regime, including Know Your Client requirements, and ongoing transaction monitoring and transaction report - ing. To manage the significantly increased compli - ance burden, PSPs and digital asset businesses will need to buildout or enhance their existing compliance frameworks.

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