Background
INFO 225 provides guidance to persons offering products or services in relation to crypto- and digital assets and assists in determining when a crypto-, digital asset or other related product may be considered to be a financial product and is therefore a regulated product which may require a person providing a financial service in relation to that financial product to hold a licence.
Due to the rapid and significant development of the digital market in recent years and the vast amount of new digital asset products and services being offered, ASIC has determined that it is necessary to update INFO 255, in order to align the regulatory regime with the continued growth of the digital asset market.
In depth
CP 381 proposes practical updates to INFO 255 and invites feedback from stakeholders on these proposals. ASIC has emphasised that CP 381 and the subsequent amendments to INFO 255 are not creating any new legislation, merely providing ASIC's view on the interpretation of the current provisions of crypto and digital assets under the Corporations Act 2001 (Cth).
Alongside these practical updates, ASIC also proposes to change the title of INFO 255 from 'crypto-assets' to 'digital assets' and amend all references to this term throughout. ASIC reasons that the term 'digital assets' denotes a broader scope and encompasses other arrangements, such as interests in managed investment schemes and tokenised versions of traditional financial products, like securities. ASIC has explicitly stated that its intention for INFO 225 is to evolve and therefore, be regulatory updated alongside the continued evolution of digital assets.
Inclusion of worked examples
CP 381 proposes the inclusion of worked examples in INFO 225, in order to provide more detailed context and assistance when interpreting the regulatory regime. These examples include hypothetical scenarios relating to exchange tokens, native token staking services, in-game non-fungible tokens (NFT), yield-bearing stablecoins, gold asset referenced tokens, membership NFTs, token representing a claim for pre-paid services, fundraising for a new blockchains, meme coins, tokenised concert tickets, tokenised securities, contract for difference over a digital assets and digital asset wallets.
While these examples may provide assistance, ASIC notes that they are not exhaustive. These examples operate under the assumptions that:
- Digital asset products may fall within the definition of multiple financial products
- Although a digital asset may not be a financial product, when coupled with other products or services, the resulting arrangement may constitute a financial product
- When determining whether a financial product exists, consideration must be given to the digital asset token in conjunction with the rights, benefits, expectations and product features which are associated with the token.
ASIC has provided these examples in order to provide insight into how ASIC may consider a specific set of facts that it may encounter.
No-action position
Due to the proposed updates to INFO 225, which will place a number of businesses within the purview of requiring a licence, ASIC proposes to offer transitional relief for digital asset businesses that are making genuine efforts to obtain their licence. To be eligible for this relief, a business must be operating at the time of CP 381 and have a licence application lodged with ASIC at the time when INFO 225 becomes operational. There are also additional conditions to be imposed, such as the requirement to have an AFCA membership. Currently, CP 381 excludes certain financial products, such as futures and perpetual derivatives, from being eligible for this relief. However, as ASIC is still in the consultation phase, these exclusions may be subject to change depending on industry feedback.
Additional proposed updates
ASIC has proposed other updates, such as:
- Providing additional guidance on facility for making a financial investment
- Decreasing the focus on the role of initial coin offerings
- Expanding the good practice guidelines, which currently apply to responsible entities, to also apply to custodial and depository service providers.
Next steps
ASIC is seeking feedback on the proposed updates and their potential impacts on industry by 5pm on 28 February 2025, with plans to finalise the proposed updates to INFO 225 by mid-2025. ASIC has emphasised these updates do not change the regulatory obligations that are imposed on a business, and instead provide clarification regarding how ASIC assesses circumstances under the current regime. The proposed updates to INFO 255 seek to encourage entities to evaluate the products and services that they offer and conclude that they need to seek a relevant license from ASIC.
