The proposed framework would require digital asset platforms that hold over a certain threshold of Australians assets ($1,500 for an individual; $5 million in aggregate) to obtain an Australian Financial Services Licence.

Digital asset platforms would need to meet all general licence obligations, consistent with other licence holders.

According to the factsheet published together with the proposal paper, the general obligations are drawn from the Australian financial services law and include:

• providing the financial service efficiently, honestly, and fairly
• managing conflicts of interest
• having a dispute resolution system
• meeting solvency and cash reserve requirements
• keeping and submitting financial records
• producing product disclosure statements
• monitoring for and disrupting market misconduct.

All digital asset platforms will also need to meet specific obligations that take into account the nature of the platforms, of tokens, and their risks. The specific obligations, unique to the digital assets industry, will include:

• standard form platform contracts
• minimum standards for holding tokens
• standards for custody software
• standards when transacting in tokens.

The proposal would also apply additional obligations to four specific activities involving non-financial products offered by digital asset platforms:

• Trading – the exchange of digital asset platform entitlements between account holders.
• Staking – the participation in validating transactions on a public network.
• Tokenisation – the creation and exchange of entitlements backed by tangible and intangible assets.
• Fundraising – the sale of entitlements to fund the development of products and services.

Obligations are "targeted to address some of the risks that arise from digital asset platform business models and the nature of the tokens they provide access to." 

Deadline for comments is 1 December 2023.

The Committee welcomed the opportunity to "consider stakeholders’ views on the regulation of digital assets in Australia" but found that the Bill was "at odds with the measured and industry accepted approach" that the Australian Government was currently pursuing.

As a first step in a reform agenda, the Treasury will prioritise 'token mapping' work in 2022, which will help to identify how cryptoassets and related services should be regulated.

The aim of the reforms will be to "identify notable gaps in the regulatory framework, progress work on a licensing framework, review innovative organisational structures, look at custody obligations for third-party custodians of cryptoassets and provide additional consumer safeguards."

This paper is structured in four parts: the first part of the paper outlines the current state of the cryptoasset ecosystem, including the existing regulatory environment; the second part of the paper proposes for consideration and feedback a licensing regime for CASSPrs, establishing the potential scope and obligations on providers; the third section discusses custody obligations to safeguard private keys; and the final part of the paper seeks early views on the classification of cryptoassets, noting further consultation will follow on this aspect later in 2022.

Deadline for comments is 27 May 2022.

The information covers good practices for market operators in how they admit and supervise these products, and good practices for product issuers in how they establish and operate these products. 

Key matters covered by ASIC’s good-practice guide include admission and monitoring standards, custody of cryptoassets, pricing methodologies, disclosure and risk management.

ASIC’s good practices are set out in Information Sheet 225 Cryptoassets (INFO 225) and Information Sheet 230 Exchange traded products: Admission guidelines (INFO 230).

Other investment products covered by the paper are listed investment companies, listed investment trusts and unlisted registered managed investment schemes.

ASIC considers that these products have unique features and risks which need to be recognised by market operators and product issuers in performing their functions and meeting existing regulatory obligations.

Key areas of focus for market operators and issuers in the consultation paper include:

• identifying crypto assets that are appropriate underlying assets;
• establishing good practice in respect of pricing, custody, risk management, and disclosure.

The deadline for comments is 27 July 2021.

The roadmap identifies current and future opportunities for blockchain and provides signposts for the future development and opportunities for the technology. It focuses on: regulation and standards; skills, capability and innovation; international investment and collaboration; and sectorial opportunities. 

The roadmap concluded:

"While blockchain initially gained prominence in the public sphere through bitcoin and other cryptocurrencies, its potential for the broader economy is beginning to be appreciated by other sectors. As outlined in this roadmap, there are significant opportunities for the technology across multiple sectors in the economy: to save money, solve problems, increase efficiencies in multiple processes, and enable new opportunities. There are some challenges to realising these opportunities which need to be addressed in order to capitalise on this promising technology. However, it is clear that, in the spheres of regulation and standards, skills, capability and innovation, and international investment and collaboration, there is significant and positive progress towards resolving those issues and forging ahead with blockchain initiatives in Australia.

 "Continued progress will rely on government, industry and the research sector sharing a vision and a focus for the development of blockchain for the whole economy, which this Roadmap’s signposts provide. All three sectors must ultimately continue to work together in the collaborative spirit that helped produce this Roadmap, to ensure that Australia can seize the opportunities of a blockchainempowered future."

ASIC updated Information Sheet 225 Initial coin offerings and cryptoassets (INFO 225) to help market participants understand how the Corporations Act 2001 (Cth) (the Act) and the Australian Securities and Investment Commission Act 2001 (Cth) may apply to businesses considering undertaking an ICO or that are involved with cryptoassets. 

The regulator said that the update is based on its recent experiences with ICOs and cryptoassets, which show that these will often be financial products or involve financial products that are regulated under the Act. 

ASIC has grouped cryptoasset participants into several distinct categories and has broadly set out the obligations that may apply to participants in each category. Notably, INFO 225 states that if companies deal with cryptoasset that fall within the definition of "financial product", then Australian laws apply, including the requirement to hold an Australian financial services (AFS) licence. 

Intermediaries that advise on, deal with or provide services linked to cryptoassets that are financial products also need to hold an AFS licence. 

Australian laws will also apply to miners and transactions processors that are part of the clearing and settlement process for tokens that are financial products. 

Further, if the payment service involves a non-cash payment facility, a range of laws will apply, including the requirement to hold an AFS licence. 

INFO 225 also provides a list of items to consider when offering an ICO, noting that “entities and their advisers need to consider all the rights and features of the ICO (regardless of how it is named and marketed) in determining whether the cryptoasset is a financial product or involves a financial product”. 

It also considers a range of further issues, such as what constitutes misleading or deceptive conduct in relation to an ICO or cryptoasset; when an ICO could be or involve a financial product; and when a cryptoasset trading platform could become a financial market. 

INFO 225 also discusses the entities that may propose to issue financial products that are linked to, invest in or expose customers to cryptoassets, as well as how overseas categorisations of cryptoassets translate in the Australian context. 

INFO 225 was first published in September 2017. 

As ASIC is laying out the groundwork for a more comprehensive regulatory environment for those entities and businesses hoping to be involved in ICOs and cryptoassets, it is important for these entities and businesses to become familiar with INFO 225 and their legal obligations under Australian law. 

In summary, INFO 225 provides:

• a non-exhaustive list of items to consider when offering an ICO;
• information on what is classed to be misleading and deceptive conduct in relation to an ICO or cryptoassets;
• information to identify when an ICO could be or involve a financial product;
• guidance about platforms that enable trading of cryptoassets; and
• information about financial products that reference cryptoassets.

The regulatory requirements are in place to maintain the integrity of Australia's financial market and ensure consumer protection and the regulator is actively monitoring this space. 

Accordingly, entities and businesses involved in ICOs and cryptoassets must ensure they have processes and procedures in place to ensure they comply with the law as well as understand that Australian laws will apply even if the ICO or cryptoasset is promoted or sold to Australian entities from offshore. 

If in doubt, entities and businesses involved or looking to be involved in ICOs and cryptoassets should seek professional advice.