In a hearing of the Senate Economics Legislation Committee this week, Australia’s securities regulator, ASIC, confirmed that its expect to release a draft update to its Information Sheet 225 (its main regulatory guidance directed to crypto-assets) before the end of the year, providing new guidance on licensing requirements for digital assets. This guidance will be open for public consultation, with finalised guidance expected sometime next year.
At the hearing, both ASIC and the Treasury took questions on the current status of the legislative and policy reform agenda for crypto-assets in Australia. ASIC Chair Joe Longo confirmed ASIC’s position that its principal role in relation to crypto-assets is as a law enforcement agency charged with enforcing financial services legislation, emphasising that ASIC does not write laws but instead enforces existing ones, adapting where necessary to evolving digital asset markets.
The Chair highlighted that ASIC had taken regulatory action in relation to a number of crypto-related offerings over the last 18 months and that it expects to continue to take action to define the regulatory perimeter.
Longo also reiterated that ASIC regards certain crypto products as financial products, bringing them within ASIC’s regulatory perimeter. He noted that:
“the position we’ve taken in recent times is the [sic] um there are actually a lot of crypto products there are that are actually financial products or financial services”.
When pressed on whether certain crypto products are financial products, Mr Longo nevertheless observed that the sector is “largely unregulated”.
One critical challenge is the ambiguous status of some crypto assets. While ASIC regulates financial products and services, distinguishing between what qualifies as such remains complex, given that many digital assets do not fit neatly into existing regulatory definitions.
Mr Longo acknowledged that
“the current regime doesn’t cover all of the manifestations of this activity”
and that it is
“Parliament’s job to make the rules”.
Mr Longo further observed that while the law has not changed, the updates to INFO225 are expected to take account of market developments and recent Court judgments.
At the same hearing, Treasury representatives confirmed that draft legislation, which is expected to regulate digital asset platforms as a new licence authorisation under the Australian financial services licence framework, is presently being drafted but there is currently no timeline for release of the exposure draft. The exposure draft had previously been expected this year, but appears to have been delayed by other urgent legislative priorities.
While the Government has committed to passing crypto regulation, the timeline for such legislation appears increasingly uncertain with another Federal election looming before September next year.
