Digital assets have been brought into Australia’s existing financial services regime with the creation of two new categories of financial product: digital asset platforms and tokenised custody platforms.
The reforms commence on 9 April 2027 and will include a six month transition period for existing businesses to apply for an Australian financial services licence (AFSL). From 9 October 2027, if you have not already applied for an AFSL under the transitional arrangements, you will not be able to operate a digital asset platform without first obtaining one.
If you hold or intend to hold digital assets on behalf of another person, you should consider how the reforms affect you.
What is a digital asset platform?
A digital asset platform (DAP) is a platform that custodies digital assets, such as a cryptocurrency exchange or a digital wallet service. It is a non-transferable facility through which an operator holds digital assets for or on behalf of another person, whether by acting as trustee or bailee, or by being obliged to deal with the digital assets in accordance with that other person’s instructions. This is likely to capture the majority of businesses who hold digital assets for third party owners.
A platform that custodies digital assets will be caught if any of those assets meet the definition of “digital token” which is an electronic record that one or more persons is capable of factually controlling. Control is assessed on a factual rather than legal basis, and turns on the ability to transfer the record, to exclude others from transferring it, and to demonstrate those abilities.
Relevantly, a DAP cannot be:
- a tokenised custody platform (TCP). If a facility meets the definition of both a DAP and a TCP, it will be classified as a TCP – a TCP is where the operator holds a real-world or other underlying asset and creates a token representing the holder’s right to redeem or take delivery of that asset. See also our separate article on TCPs “Tokenised Custody Platforms: Navigating Australia’s New Digital Asset Regulation”.
- a managed investment scheme (MIS). If a platform is both a DAP and a MIS (and an exclusion does not apply), the platform is regulated as a MIS.
In substance, a DAP operates as custodian for digital assets: the operator holds the digital assets, and the client’s entitlement to those assets is recorded in an internal account maintained by the operator.
A DAP is “issued” to a person when they first open an account or enter into a relationship with a digital asset platform provider.
Exemptions
Some of the key exemptions applicable to the regulation of DAPs are:
- the low-value exemption, which applies where the total transaction values across relevant platforms do not exceed $10 million over the preceding 12 months, no digital assets that are financial products are held in the platform, the market value of a digital asset does not exceed $5,000 at the time it is first held on the platform, and the operator lodged a notice with ASIC regarding its intention to rely on the exemption.
- the incidental activity exemption, which applies to persons whose services are limited to advising on the existence of a DAP or arranging for another person to use one in the ordinary course of their business, provided those services do not form a significant part of their business.
DAP specific obligations
New requirements for DAP operators
The ordinary AFS licensing conditions will apply to DAPs, but the additional requirements below will also apply.
| Minimum standards on asset-holding and transactions and settlements | ASIC will make new legislative instruments establishing asset-holding standards and transactional and settlement standards for DAP operators. These are outcomes-based and proportionate, designed to apply across different business models without creating unnecessary barriers for smaller or innovative operators. |
| Platform rules | Operators must establish platform rules that govern eligibility criteria for clients, settlement methods, disclosure of counterparty and operational risks, and the arrangements for depositing, redeeming and directing delivery of assets. These rules have contractual force between the operator and each client. |
| DAP/TCP Guide | Instead of a traditional product disclosure statement, operators must provide clients with a DAP/TCP Guide before the platform is issued. This guide must cover the platform’s custody arrangements, fees and charges, risks, client rights (including withdrawal and voting rights), and complaint processes. |
| No custodial or depository authorisation needed | Operators of DAPs that custody financial products will not need a separate custodial or depository authorisation, as the new DAP framework covers this function. ASIC will develop specific standards to be met by DAPs in relation to custody and trading standards. Consultation will open on ASIC’s proposals for this and other matters later in 2026. |
For anyone who holds digital assets on behalf of third parties, it is important to understand if you will meet the definition of a DAP and need an AFSL. If you are not sure, seek legal advice.
You should also consider engaging in ASIC’s consultation later this year to set important custodial, trading and financial standards.
Hamilton Locke’s Funds and Financial Services team are advising clients across the sector on structuring, licensing, and preparing for these reforms.
