The Australian Securities and Investments Commission (ASIC) has unveiled a draft guidance that aims to bring most cryptocurrency-related products under existing financial licensing frameworks. The proposed measures seek to tighten oversight of the fast-evolving digital asset market and ensure investor protection.
Under the proposed framework, companies offering digital asset-related products would be required to hold an Australian Financial Services Licence (AFSL). This would impose stricter obligations, including the issuance of audited prospectuses to investors. Additionally, ASIC would gain authority to review, amend, or halt the issuance of digital asset products.
Living Document to Reflect Evolving Market
“This guide is a living document,” said Mr. Kirkland, a senior ASIC official. “The products on offer to consumers continue to evolve, as does our understanding of the law.”
He emphasized that many digital asset-related products already qualify as financial products under current legislation. “The law is clear: if you’re providing financial services, you do need to have a licence,” Kirkland stated.
The guidance introduces a grace period for companies that apply for an AFSL, during which ASIC would not pursue legal action for potential breaches. However, firms that do not apply for a licence must justify their decision.
“We believe this updated guidance might lead some people who thought they didn’t need a licence to reconsider their position,” Kirkland added.
Audited Prospectuses and Regulatory Oversight
Certain companies issuing digital assets would be required to prepare a prospectus, including audited financial information. ASIC would have the power to scrutinize these prospectuses and direct companies to make changes or even halt their issuance if necessary.
The regulatory shift follows a series of high-profile court cases involving ASIC, including a recent unsuccessful action against Finder.
“This guidance has been informed by some of the court action we’ve taken and the decisions that have come from those cases,” Kirkland explained.
Final Rules Expected by Mid-2025
ASIC plans to finalize the rules by mid-2025, with public consultations open until February 28.
The proposed measures mark a significant step in Australia’s efforts to regulate the cryptocurrency industry, balancing market innovation with robust consumer protections. As digital assets gain traction, the framework aims to ensure greater accountability and transparency across the sector.
