MinterEllison has lodged a submission with Treasury in response to the release of a Proposal Paper detailing reforms to the treatment of digital asset platform providers released in October 2023. This submission follows our summary of the proposed reforms, together with a more detailed overview.

Key points from our submission

• We support the approach proposed to regulate digital asset platforms rather than digital assets themselves and to do so under the existing Australian financial services licensing (AFSL) regime.
• We also support the proposed low value exemption for digital asset platforms, but have suggested an alternative threshold for the total size of the facility based on the number of customers. This would prevent the threshold needing to be adjusted periodically to reflect changes in value based on inflation or another appropriate measure.
• A 'safe harbour' for networks and tokens that are used for a non-financial purpose by individuals and businesses would be useful. To help the safe harbour reflects changes in the market, we have suggested giving ASIC the power to designate whether particular tokens or networks are or are not regulated as financial products.
• We agree that lending to businesses in the form of tokens should be permitted subject to appropriate regulation. The simplest solution would be to treat loans of stablecoins as loan of money and therefore subject to regulation as a debenture.
• We also agree that margin lending involving digital assets should be regulated under the Corporations Act margin lending regime.
• We do not think Treasury's proposed 12 month transition period is long enough. We have suggested that the transition period be extended by giving platform providers and others requiring an AFSL up to 12 months to lodge an application for the relevant licence authorisations and a further period of up to 12 months to comply with the new regime.

VIEW SUBMISSION (PDF)

Please contact us if you have any queries about any aspect of our submission.