Australia Expands Financial Regulation to Stablecoins and Tokenized Assets Requiring Licensing

Australia's financial regulator, the Australian Securities and Investments Commission (ASIC), has classified stablecoins, wrapped tokens, tokenized securities, and digital wallets as financial products under existing law, requiring providers to obtain an Australian Financial Services License to operate legally. This updated guidance clarifies that many widely traded digital assets fall within this classification, aiming to enhance consumer protection and allow ASIC to act against harmful or poor practices in the crypto industry. To ease the transition, ASIC has granted a no-action relief period until June 30, 2026, during which businesses can continue operations while applying for the necessary licenses. The guidance also extends regulatory oversight to decentralized and offshore entities serving Australian users, closing loopholes that previously allowed some platforms to avoid compliance. Additionally, ASIC has proposed targeted relief measures for distributors of stablecoins and wrapped tokens, and amended custody standards to better accommodate blockchain-based holdings. These regulatory changes reflect Australia's broader initiative to integrate crypto assets within its traditional financial framework while balancing innovation with consumer safeguards.