Digital assets reform passes: 18-month licensing window opens for platform operators
The countdown to Australia’s new digital assets framework has started. Operators of digital asset platforms (DAPs) and tokenised custody platforms (TCPs) will have a limited window to apply for an Australian financial services (AFS) licence.
We outline what’s changed, the implications for market participants and the practical steps to take now.
Need to know
The Corporations Amendment (Digital Assets Framework) Bill 2025 (DAF Legislation) introduces two new categories of financial product - DAPs and TCPs. Operators will be required to hold an AFS licence.
Following public consultation, several amendments were made to the DAF Legislation, including refining definitions, clarifying exemptions and adjusting ASIC's standards-setting powers.
Transitional licensing arrangements have been improved so that an existing operator who applies for an AFS licence (or a variation) during the transition period may continue operating while ASIC reviews the application.
Operators will have an 18-month window from the date the DAF Legislation receives royal assent to lodge an AFS licence application.
Market participants should begin considering the practical implications of the new framework and assessing their licensing and compliance requirements.
Background
The regulation of digital assets in Australia has been subject to significant reform in recent years.
In September 2025, Treasury released the Treasury Laws Amendment (Regulating Digital Asset, and Tokenised Custody, Platforms) Bill 2025 (draft TLA Bill), being draft legislation intended to bring digital asset and tokenised custody platforms within the remit of Australian financial services (AFS) regulation.
Following consultation on the draft TLA Bill, the Government introduced the DAF Legislation. On 2 February 2026, Treasury published a summary of the consultation outcomes, providing insight into stakeholder feedback and the Government's response.
The DAF Legislation passed both houses of Parliament on 1 April 2026.
High level overview of the DAF Legislation
The DAF Legislation introduces two new categories of financial product:
- DAPs: a facility where the operator possesses one or more digital tokens and those tokens are possessed for or on behalf of another person; and
- TCPs: a facility where the operator identifies one or more assets other than money, and for each asset the operator creates a single digital token where possessing the digital token confers a right to redeem, or direct the delivery of, the asset. The operator must also act on behalf of the token holder (including as trustee or bailee) and may also manage the asset according to the holder’s instructions.
As DAPs and TCPs are now recognised as categories of financial products, operators of these platforms will be required to hold an AFS licence.
Amendments to what is a ‘financial product’
Custodial staking arrangement
A ‘custodial staking arrangement’ is defined with operator‑facing and beneficiary‑facing consent and benefit requirements and is used to drive managed investment scheme (MIS) and financial product carve‑outs for the part of a DAP/TCP that relates to that arrangement.
Public digital token infrastructure
‘Public digital token infrastructure’ is separately defined and excluded, with an express reference to ‘consensus activities’ to capture permissionless participation in maintaining token networks without dragging the infrastructure itself into concepts related to Chapter 7 of the Corporations Act.
Wrapped tokens
Whether a token is itself a financial product remains a token‑by‑token question under Chapter 7 of the Corporations Act. At a high level, where a token merely wraps an underlying asset and gives the holder a right to redeem or direct delivery, the redemption right is to be disregarded when classifying the wrapper.
This means that a wrapper does not become a financial product just because it is redeemable – the legal and economic substance of the underlying position must be considered.
The effect of the DAF Legislation is to introduce a more robust framework that avoids treating the underlying infrastructure or staking‑type participation as a financial product or facility while regulating the custodial layer at the platform level.
Other licensing exemptions
The DAF Legislation also includes exemptions based on the level of risk the crypto platform presents in the market:
- Low-value exemption:
- where the total market value of transactions across all an operator’s platforms does not exceed $10 million over a 12-month period; and
- where the operator holds less than $5000 per customer.
- Insignificant part of business exemption:
- where the service consists only of either or both of advising another person about the existence of a DAP or TCP, or arranging for another person to use a DAP or TCP; and
- where the service provider does so in the ordinary course of business and such services are not a significant part of their business.
For example, a grocery business that provides a variety of payment methods for customers to purchase goods and services (such as credit card, BPAY, direct debit or even the transfer of underlying assets to a digital asset platform or private wallet controlled by the retailer), would not be captured.
For further information about the contents of the DAF Legislation, please refer to our previous article Treasury comments on stakeholder feedback on updated cryptocurrency legislation.
Next steps
The DAF Legislation will commence 12 months after the date royal assent is received.
The DAF Legislation prescribes a ‘transition period’ of six months from commencement (being 18 months from the date the DAF Legislation receives royal assent) for ASIC to assess and determine AFS licence applications. Recognising this may not be practically achievable, the DAF Legislation now allows a person who applies for an AFS licence (or a variation) covering DAPs or TCPs during the transition period to continue operating while ASIC reviews the application.
The passage of the DAF Legislation marks a landmark moment for Australia's digital asset regulatory landscape. Market participants should now consider how the new framework applies to them and begin assessing their licensing and compliance requirements.
To discuss what these reforms mean for you, please reach out to John Bassilios or a member of our financial services team to learn more.
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