Regulation of Stablecoin Intermediaries in Australia Relaxed
The Australian Securities and Investments Commission (ASIC) has taken a significant step forward in regulating the digital assets sector, extending regulatory relief to additional licensed stablecoin issuers. This move comes as global players show interest in meeting Australian regulatory requirements, potentially indicating a demand for Australian stablecoins.
Last Thursday, ASIC announced that it would allow intermediaries to distribute stablecoins from Australian Financial Services (AFS) licensed issuers without requiring separate AFS, market, or clearing facility licences. This relief fits within financial services law as a temporary transitional measure ahead of broader stablecoin reforms.
ASIC was the first institution in Australia to grant regulatory relief for intermediaries in the distribution of stablecoins issued by licensed Australian providers. The regulator's approach has been praised as 'pragmatic' by Steve Vallas, CEO of Blockchain APAC.
The relief does not change whether some stablecoins are financial products but suspends secondary licensing layers for distributors where the issuer already holds an AFS licence. The exemption does not shift liability from stablecoin issuers, who remain responsible for disclosure and prudential obligations.
Vallas believes the market will drive the success of Australian dollar stablecoins. He stated, 'The market will decide the success of Australian dollar stablecoins, and I believe there is a strong potential for growth in this area.'
ASIC's digital assets guidance updates, expected to be published in the coming weeks, will include key themes and public submissions received in response to its December consultation. The framework for payment stablecoins is expected to be consulted on in 2023.
Thursday's relief represents Australia's first major step toward resolving regulatory uncertainty that has plagued the stablecoin market. ASIC is working closely with the Treasury to implement the government's digital assets reforms, including a framework for payment stablecoins.
The relief could expand significantly as Australia's digital asset sector matures. The relief takes effect once registered in federal legislation.
ASIC's December consultation on digital assets guidance had signaled that some stablecoin issuers require licensing under current definitions. The regulator's decision to extend regulatory relief is a positive step towards fostering innovation in the digital assets sector while maintaining investor protection.
The relief does not mark the end of the regulatory journey for stablecoins in Australia, but it is a significant step towards a more welcoming and clear regulatory environment for this emerging asset class. As the digital assets sector continues to evolve, it is likely that ASIC will continue to review and update its regulatory approach to ensure it remains fit for purpose.
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