Global: ASIC Seeks Feedback on Updated Digital Asset Guidance

The Australian Securities and Investments Commission (ASIC) has issued an updated draft of its guidance on digital assets, aiming to provide greater regulatory clarity while requesting feedback from industry stakeholders. This move reflects ASIC’s ongoing efforts to address complexities in the digital asset ecosystem, akin to the U.S. Howey test, which determines whether an asset qualifies as a security under the law.

Unlike some regulators who avoid specific examples to prevent regulatory loopholes, ASIC has opted for transparency by including 13 detailed case studies in its updated guidance. These examples clarify how various digital asset arrangements might be treated under Australian financial laws.

Key Insights from ASIC’s Guidance

1. Understanding Token Rights
   ASIC emphasizes that tokens cannot be divorced from their associated rights, benefits, expectations, and features when traded.

   “When you trade a ‘token,’ you are transferring the rights associated with that token,” the guidance states, highlighting the bundled nature of digital assets.

2. Staking on Proof-of-Stake Blockchains
   • Native token staking by individuals is not classified as a financial product.
   • However, staking services offered by third-party operators, where rewards are bundled and fees are charged, may fall under the definition of a financial product.
3. Meme Coins, NFTs, and Gaming Assets
   • Meme coins and NFTs used as in-game assets are unlikely to be classified as financial products, provided they are not marketed as investments.
   • NFTs offering access to exclusive events or specific services, like lawn mowing tokens tied to tangible benefits, are also exempt, as these arrangements are not designed to generate returns for token holders.
4. Financial Products: Yield-Bearing and Asset-Backed Tokens
   • Yield-bearing stablecoins and tokens backed by gold held in a trust are likely to be classified as financial products due to their investment-like characteristics.
5. Non-Cash Payment Facilities
   ASIC also addresses non-cash payment services, such as self-custodial wallets integrated with stablecoins. If a wallet operator issues its own stablecoin and facilitates payments between users and external parties, it may be required to register as a provider of non-cash payment services. However, questions remain regarding scenarios where wallets do not issue their own tokens, prompting the need for further industry feedback.

Call for Feedback and Future Policy Development

ASIC has invited public and industry stakeholders to provide feedback on the updated guidance, which represents the fifth iteration since its first issuance in 2017. The regulator also announced that it is working on additional policy guidance focused on digital asset platforms and facilities.

By providing clarity through these examples, ASIC seeks to balance innovation with investor protection, addressing both the opportunities and risks inherent in the rapidly evolving digital asset sector.

This initiative underscores ASIC’s proactive approach to regulatory alignment in a space that continues to challenge traditional legal frameworks. Feedback from this consultation will shape the final version of the guidance and inform future regulatory developments.