Australia's anti-money laundering and counter-terrorism financing (AML/CTF) framework has undergone a major overhaul since the original 2006 legislation. The Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2024, together with the AML/CTF Rules 2025, brings changes that affect both existing reporting entities and newly regulated sectors. The key dates in March and July 2026 have now passed, so the question for most businesses is no longer "what is coming" but "are we compliant now?"

Key Implementation Dates

The reforms rolled out in phases:

• 31 March 2026: The reformed obligations (Schedules 1–3 of the Amendment Act and the AML/CTF Rules 2025) commenced for existing reporting entities, including virtual asset service providers. Tranche 2 services also became designated services on that date, but the main obligations (AML/CTF programs, customer due diligence, reporting and record keeping) did not apply to them until 1 July 2026
• 1 July 2026: Tranche 2 obligations commenced (Amendment Act Schedule 3, Part 4, item 11). The first annual AML/CTF compliance reporting period under the 2025 Rules also runs from 1 July 2026 to 30 June 2027
• 29 July 2026: Enrolment deadline for Tranche 2 businesses that were already providing designated services before 1 July 2026, the date from which they have had the main AML/CTF obligations (Amendment Act Schedule 3, Part 4, item 12; otherwise enrolment is required within 28 days of starting to provide a designated service: s 51B)
• 30 March 2029: Latest end date for certain transitional reporting arrangements. Entities already on the Reporting Entities Roll at commencement can keep using the legacy suspicious matter and threshold transaction report formats until the earlier of 30 March 2029 or a date AUSTRAC specifies (AML/CTF Rules 2025, rr 12-2 and 12-4).

Tranche 2: Who Is Now Regulated?

Since 1 July 2026, the following businesses have had the main AML/CTF obligations when providing designated services:

• Legal practitioners, accountants and other professionals: When providing the professional services listed in the Act, including assisting with buying, selling or transferring real estate or a body corporate or legal arrangement, receiving, holding and controlling client money or other property as part of a transaction, organising equity or debt financing, and creating or restructuring companies and trusts (s 6, table 6)
• Real estate professionals: When brokering the sale, purchase or transfer of real estate, or selling real estate without an independent agent; there is no value threshold (s 6, table 5)
• Dealers in precious metals and stones: When buying or selling precious metals, precious stones or precious products in a transaction involving $10,000 or more in physical currency or virtual assets (s 6, table 2, item 2). (Bullion dealing was already covered, with no threshold: table 2, item 1.)
• Trust and company service providers: When forming companies or other legal arrangements, acting (or arranging for someone to act) as a director, secretary, trustee or partner, or providing a registered office address (s 6, table 6)

Tranche 2 entities had to enrol with AUSTRAC within 28 days of first providing a designated service (s 51B; for Tranche 2 businesses that were already providing designated services before 1 July 2026, the date from which they have had the main AML/CTF obligations, by 29 July 2026: Amendment Act Sch 3, Pt 4, item 12), and to have AML/CTF programs in place from 1 July 2026.

Fundamental Shift: Risk-Based Approach

The reforms embed a principles-based, risk-responsive approach throughout the regime. Key changes include:

Unified Customer Due Diligence Framework

Under the previous rules, customer identification, ongoing customer due diligence (OCDD), and enhanced customer due diligence (ECDD) operated somewhat independently. The new regime integrates these into a single CDD framework in Part 2 of the Act comprising:

• Initial Customer Due Diligence (ICDD) (s 28): Generally before providing designated services
• Ongoing Customer Due Diligence (OCDD) (s 30): Continuous monitoring throughout the business relationship
• Simplified CDD (s 31) where risk is low, and Enhanced CDD (s 32) where ML/TF risk is high or other triggers apply

Critically, CDD is now a continuous obligation across the entire customer lifecycle, not a one-time onboarding exercise followed by separate monitoring.

Fewer Prescribed Timeframes

The new framework puts more weight on risk-based triggers and less on fixed calendar cycles. Under the Act:

• Reviews must be triggered by risk indicators, such as significant changes to the business or information from AUSTRAC (s 26D)
• The timing of CDD measures must be commensurate with assessed risk levels
• Some outer limits remain: the ML/TF risk assessment, the AML/CTF policies and independent evaluations must each be reviewed or carried out at least once every 3 years (ss 26D and 26F)

This means a high-risk customer relationship may require re-verification within days of a risk indicator appearing, while a low-risk relationship may appropriately be reviewed less frequently. But the business must justify its approach based on risk assessment.

Proliferation Financing

A significant addition is the explicit inclusion of proliferation financing (PF) risk. Under the Act, "ML/TF risk" means the risks of money laundering, financing of terrorism and proliferation financing that a reporting entity may reasonably face in providing its designated services. So businesses need to consider PF risk in their ML/TF risk assessments.

AML/CTF policies must manage and mitigate proliferation financing risk alongside money laundering and terrorism financing risk (s 26F).

Virtual Asset Services: Expanded Scope

The reforms significantly expand coverage of virtual asset services:

Terminology Changes

• "Digital currency" becomes "virtual asset" (s 5B)
• "Digital Currency Exchange (DCE)" becomes "Virtual Asset Service Provider (VASP)"
• The DCE Register is now the Virtual Asset Service Provider Register (Part 6A)

New Designated Services

Virtual asset designated services now include:

• Exchange between virtual assets and money (s 6, table 1, item 50A)
• Exchange between virtual assets (item 50B, newly covered)
• Safekeeping of virtual assets for customers (item 46A, newly covered)
• Transfers of virtual assets on behalf of customers, through the transfer of value provisions
• Other table 1 services provided in connection with the offer or sale of a virtual asset by a business participating in the offer or sale (item 50C)

Travel Rule Obligations

The "travel rule" requires ordering institutions to collect, verify and pass on payer and payee information for value transfers, including virtual asset transfers (AML/CTF Act Part 5, ss 64–66A; AML/CTF Rules 2025, Part 8). This includes:

• Payer's full name plus one or more of: a unique customer identification number, a unique identifier, date and place of birth, or address
• Payee's name and tracing information (for virtual assets, including the wallet address)
• Due diligence on the receiving wallet, including self-hosted wallets (s 66A)

Practical Implications

For Existing Reporting Entities

The new obligations have applied since 31 March 2026. If you have not yet:

1. Reviewed your AML/CTF program: Ensure it reflects the new ML/TF risk assessment and AML/CTF policies structure, and remove references to separate Part A and Part B structures
2. Updated terminology: Replace references to "digital currency" with "virtual asset" throughout documentation
3. Moved to risk-responsive triggers: Replace fixed review periods with risk-based triggers, while keeping the statutory 3-year outer limits
4. Documented PF assessments: Include proliferation financing in risk registers
5. Implemented travel rule compliance: Ensure systems can collect, verify and pass on travel rule information

For Tranche 2 Entities

1. Confirm whether you are caught: Map your services against the designated services in s 6 (particularly tables 5 and 6)
2. Enrol with AUSTRAC: Enrolment is required within 28 days of starting to provide a designated service (s 51B). If you have not enrolled, act now
3. Maintain your AML/CTF program: Document risk assessments, CDD procedures, and compliance governance
4. Designate an AML/CTF Compliance Officer: Appoint an individual with appropriate authority (ss 26J–26L)
5. Train staff: Ensure personnel understand obligations and recognise suspicious matters
6. Prepare for compliance reporting: The first reporting period runs from 1 July 2026 to 30 June 2027, with a 3-month lodgement period after it (r 9-9)

Conclusion

Now that the reforms are in force, the shift to principles-based, risk-responsive obligations gives businesses flexibility but needs more judgment in compliance. For existing reporting entities and Tranche 2 businesses alike, the priority now is checking that what is on paper matches what happens in practice.

This is general information, not legal advice.

Questions? Email hello@autono.legal.

Sources

• Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), current compilation (C2026C00447, compilation date 1 Oct 2026): https://www.legislation.gov.au/C2006A00169/latest
• AML/CTF Amendment Act 2024 (No. 110 of 2024), as made (s 2 commencement table; Schedule 3, Part 4, items 11 and 12): https://www.legislation.gov.au/C2024A00110/asmade
• AML/CTF Rules 2025 (F2025L01026), as made: https://www.legislation.gov.au/F2025L01026/asmade
• AML/CTF Rules 2025, current compilation (F2026C00274): https://www.legislation.gov.au/F2025L01026/latest

If you're providing personal advice to a retail client (s 961(1)) about crypto tokens that are financial products, the best interests duty applies (s 961B).

The duty:

The provider must act in the best interests of the client in relation to the advice. The provider satisfies the duty if it proves it took each of the steps in s 961B(2) (often called the "safe harbour"): (a) Identify the objectives, financial situation and needs the client disclosed through their instructions (b) Identify the subject matter of the advice sought and the client's relevant circumstances (c) Where it is reasonably apparent the information is incomplete or inaccurate, make reasonable inquiries to get complete and accurate information (d) Assess whether the provider has the expertise to advise on the subject matter, and if not, decline to give the advice (e) If it would be reasonable to consider recommending a financial product, conduct a reasonable investigation into the financial products that might meet the client's relevant objectives and needs, and assess the information gathered (f) Base all judgements on the client's relevant circumstances (g) Take any other step that would reasonably be regarded as being in the client's best interests

Crypto complications:

• What counts as a 'reasonable investigation' of a DeFi protocol?
• What are the 'relevant circumstances' of a crypto-native client?
• Competency: does the adviser understand smart contract risk?
• How does the conflicted remuneration ban (s 963A definition; ss 963E–963L) apply to token incentives and airdrops?

Practical risk: Advice that does not meet s 961B can expose the licensee to civil penalties (s 961K; and s 961L for failing to take reasonable steps to ensure representatives comply), an authorised representative to civil penalties (s 961Q), and the licensee to compensation orders (s 961M).

Best Interests Duty & Crypto: Where Advisers Get Caught

These are the main issues.

The Core Problem

Section 961B was designed with traditional financial products in mind: managed funds, insurance, and securities with disclosure documents and track records. Crypto financial products test many of the assumptions built into the safe harbour steps.

Safe Harbour Steps Applied to Crypto

(a)–(c): Identify the client's instructions, subject matter and relevant circumstances

Relatively straightforward, but "relevant circumstances" for a crypto-native client may include:

• Self-custody capability and risk tolerance

• Understanding of protocol-level risks (smart contract exploits, oracle failures, governance attacks)
• Exposure across multiple chains/protocols (not just portfolio allocation)
• Tax position across jurisdictions (cross-border holdings are common)

An adviser who only asks about income, assets, and risk appetite may not be meeting s 961B(2)(b)–(c) for crypto clients, because the relevant circumstances can be materially different.

(d): Competency assessment

The adviser must assess whether they have the expertise required to advise on the subject matter. For crypto financial products, that means understanding:

• Smart contract architecture and audit status
• Tokenomics and emission schedules
• Protocol governance mechanisms
• Liquidity depth and withdrawal risk
• Counterparty risk in "decentralised" protocols that aren't

If the adviser doesn't have that expertise, s 961B(2)(d) requires them to decline to give the advice.

(e): Reasonable investigation of financial products

This is the hardest step for DeFi. What does "reasonable investigation" look like here?

Our view: "Reasonable investigation" for a DeFi protocol requires, at minimum:

1. Smart contract audit review (read the findings, beyond checking that an audit exists)
2. Governance structure analysis (who controls upgrades, treasury, admin keys)

1. Liquidity and withdrawal risk assessment
2. Counterparty/bridge risk mapping
3. Regulatory status in AU and relevant jurisdictions (including whether the product or platform is covered by an AFS licence, and from 2027 whether it falls within the new digital asset platform regime)

An adviser who recommends a yield-bearing DeFi token based on APY and market cap alone is unlikely to have met s 961B(2)(e).

(f): Base judgements on client's relevant circumstances

Ties back to (b)–(c). The judgement must be grounded in the client's actual situation. Generic crypto enthusiasm or fear of missing out doesn't count.

Conflicted Remuneration (s 963A)

The ban on conflicted remuneration causes specific problems in crypto:

• Token incentives/airdrops received by the adviser or their licensee for recommending a protocol: likely conflicted remuneration

• Referral fees paid in tokens: same analysis as cash referral fees; the form doesn't change the substance
• Staking/yield earned by the adviser on products they recommend: potential conflict requiring disclosure at minimum, possible ban breach
• Volume-based fee tiers on exchanges: if the adviser routes through a specific exchange for better fees, that's a conflict

The test looks at function over form. Section 963A defines conflicted remuneration as "any benefit, whether monetary or non-monetary", given to a licensee or representative who provides financial product advice to retail clients, that could reasonably be expected to influence the advice or the choice of product. Payment in governance tokens instead of AUD makes no difference. If it could reasonably be expected to influence the advice, it is likely to be caught by Div 4 of Pt 7.7A.

Practical Risk Map

Bottom Line

The best interests duty does apply to personal advice to retail clients about crypto tokens that are financial products. INFO 225 points advisers to RG 175 (AFS licensing: Financial product advisers: Conduct and disclosure) for personal and general advice obligations, and the High Court's 2026 Block Earner decision confirms how broad the financial product definition is. The duty applies to crypto financial products in the same way as for any other financial product, and advice that does not reflect the s 961B(2) steps may not meet it.

Advisers operating in this space without deep protocol-level understanding are carrying significant enforcement and civil liability risk.

This is general information, not legal advice.

Questions? Email hello@autono.legal.

Sources

• Corporations Act 2001 (Cth), current compilation (C2026C00432, compilation date 19 Sep 2026): https://www.legislation.gov.au/C2004A00818/latest
• ASIC INFO 225, Digital assets: financial products and services (updated Oct 2025; minor edits Apr 2026): https://www.asic.gov.au/regulatory-resources/digital-transformation/digital-assets-financial-products-and-services
• ASIC 26-124MR: ASIC successful in High Court Block Earner appeal: https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-124mr-asic-successful-in-high-court-block-earner-appeal

If a crypto token is a financial product, the market misconduct provisions in Part 7.10 (market manipulation, false trading, insider trading and misleading conduct) may apply. The market manipulation and false trading provisions turn on trading on a "financial market" (s 767A) operated in this jurisdiction. The insider trading provisions apply to "Division 3 financial products". (The separate "market integrity rules" are made by ASIC under s 798G for licensed markets and their participants.)

Insider trading (s 1043A):

A person who possesses inside information about a Division 3 financial product must not: (a) deal in that product; or (b) procure another to deal; or (c) communicate the information to another who is likely to deal or procure dealing.

Crypto application:

• Core team members trading before protocol announcements
• DAO contributors with knowledge of treasury decisions
• Validators/miners with MEV-derived information advantages
• Exchange employees with order book visibility

Market manipulation and false trading (ss 1041A–1041C):

• Wash trading on centralised exchanges
• Pump and dump schemes coordinated on social media
• Spoofing / layering on order books
• Oracle manipulation in DeFi

Open question: Sections 1041A, 1041B(1) and 1041C refer to financial products traded on a "financial market operated in this jurisdiction" (or similar). For a token traded only on an offshore exchange or DEX, whether these sections apply is a threshold question. Whether a particular offshore or DEX venue is "operated in this jurisdiction" (see s 791D) is untested.

Market integrity and digital assets: the detail

1. The Statutory Framework

Part 7.10 of the Corporations Act 2001 (Cth) deals with market misconduct. The threshold question for crypto is: is the token a "financial product" (s 763A, or a specific product listed in s 764A)?

If yes, the Part 7.10 prohibitions can apply: insider trading (s 1043A, for Division 3 financial products), market manipulation (s 1041A), false trading and market rigging (ss 1041B–1041C), and misleading or deceptive conduct (s 1041H).

Recent Australian cases make this concrete:

Takeaway: ASIC has won key cases establishing that crypto products with yield, payment or derivative features can be financial products, and lost others (Finder). These are licensing and product cases, not market misconduct cases. But once a token is a financial product traded on a financial market, Part 7.10 is in play.

1. Insider Trading (s 1043A): Crypto Application

Section 1043A prohibits dealing in Division 3 financial products while in possession of information that is:

• not generally available (s 1042C), AND
• if it were generally available, a reasonable person would expect it to have a material effect on the price or value of the products (s 1042A definition of inside information; s 1042D explains material effect)

"Division 3 financial products" are securities, derivatives, MIS interests, certain government debentures, certain superannuation products, and any other financial products able to be traded on a financial market (s 1042A). Jurisdiction conditions are in s 1042B.

Crypto-specific risk scenarios:

Core team / foundation employees:

• Knowledge of protocol upgrades, tokenomics changes, partnership announcements, exchange listings
• Directly analogous to corporate insiders. If the token is a Division 3 financial product, this is plain s 1043A exposure.

DAO contributors with governance access:

• Knowledge of treasury diversification, grant allocations, fee-switch activations
• The "inside information" question turns on whether the DAO's governance process makes the information "generally available" before it's executable. Public governance votes are generally available, but pre-vote coordination in private contributor channels may not be.

Validators / MEV actors:

• This is the open question. MEV (Maximal Extractable Value) involves validators/searchers with transaction ordering advantages. Under AU law, the question is whether mempool information constitutes "inside information" about a financial product. Our view: for tokens that are Division 3 financial products, it may be. Whether pending transactions in a public mempool are "readily observable matter" (s 1042C(1)(a)) is a real argument the other way. No Australian court has decided this.

Exchange employees:

• Staff with order book visibility or advance knowledge of listings. If the token is a Division 3 financial product, this is s 1043A exposure, subject to the jurisdiction conditions in s 1042B.

1. Market Manipulation (ss 1041A–1041C): Crypto Risks

s 1041A: Market manipulation proper:

• Transactions that create or maintain an artificial price for trading in financial products on a financial market operated in this jurisdiction
• Wash trading on CEXs can fit: inflated volume creates an appearance of liquidity
• Coordinated pump-and-dump via social media groups: if the token is a financial product traded on such a market, this is s 1041A + potentially s 1041B (false trading)

s 1041B: False trading and market rigging:

• Conduct that creates a false or misleading appearance of active trading, or about the market for or price of financial products, on a financial market operated in this jurisdiction
• Bot-driven wash trading
• Spoofing/layering on order books: placing and cancelling orders to move price

s 1041C: Artificially maintaining a trading price:

• Fictitious or artificial transactions or devices that maintain, inflate or depress a price, or cause fluctuations
• Market-making arrangements that guarantee a floor price
• Token buyback programs designed to prop price during unlocks

DeFi-specific manipulation:

• Oracle manipulation (moving the price feed a protocol relies on)
• Flash loan attacks that manipulate AMM pricing
• Sandwich attacks by MEV bots

1. The Jurisdictional Question: Offshore DEXs

This is the hardest open question.

Does ASIC have jurisdiction over a DEX that is not "in" Australia?

Section 767A defines a "financial market" as a facility through which offers to acquire or dispose of financial products are regularly made or accepted. Operating a financial market in this jurisdiction generally requires an Australian market licence (Part 7.2). Part 7.2A gives ASIC supervision of licensed markets and power to make market integrity rules binding market participants and operators (ss 798F, 798G).

For an offshore DEX:

• Insider trading: s 1043A applies to acts within this jurisdiction, and to acts outside it in relation to Division 3 financial products issued by a person who carries on business in this jurisdiction or a body corporate formed here (s 1042B). So an AU-linked token can carry insider trading exposure even on an offshore venue.

• Manipulation and false trading: ss 1041A–1041C reach conduct "whether in this jurisdiction or elsewhere", but the effect must be on a financial market operated in this jurisdiction. Manipulating a token's price solely on an offshore venue does not fit neatly within those sections. Other provisions (for example s 1041H misleading conduct, or s 1041E false or misleading statements) may still be relevant.
• But ASIC's practical enforcement power over the DEX itself (injunctions, disgorgement) is very limited for a truly decentralised protocol with no identifiable AU operator.

If ASIC tried to pursue a DEX, it would likely look to an interface operator or identifiable developers with an Australian connection, rather than the smart contracts themselves.

Practical answer: ASIC can pursue AU persons for insider trading in AU-linked Division 3 financial products wherever the trade executes. The manipulation provisions need a link to a financial market operated in this jurisdiction. ASIC cannot regulate the DEX infrastructure itself unless there's an identifiable operator with an AU connection. That leaves a gap in practical enforcement.

1. Practical Guidance: Who Is Exposed

Bottom line: If a crypto token is a financial product (and the High Court's 2026 Block Earner decision confirms how wide that category is), Part 7.10's market misconduct provisions can apply to trading in those products, subject to the market and jurisdiction conditions in each section. The law is there. ASIC's willingness and capacity to enforce it in crypto markets is the variable.

This is general information, not legal advice.

Questions? Email hello@autono.legal.

Sources

• Corporations Act 2001 (Cth), current compilation (C2026C00432, compilation date 19 Sep 2026): https://www.legislation.gov.au/C2004A00818/latest
• ASIC v Web3 Ventures Pty Ltd [2026] HCA 21 (17 June 2026): https://www.hcourt.gov.au/sites/default/files/eresources/2026-06-17/HCA/Australian%20Securities%20and%20Investments%20Commission%20v%20Web3%20Ventures%20Pty%20Ltd%20%28S136-2025%29%20%5B2026%5D%20HCA%2021.pdf
• ASIC 26-124MR: ASIC successful in High Court Block Earner appeal: https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-124mr-asic-successful-in-high-court-block-earner-appeal
• ASIC v Wallet Ventures Pty Ltd [2025] FCAFC 93 (judgment, ASIC-hosted): https://download.asic.gov.au/media/wnwctatp/25-147mr-asic-v-wallet-ventures-pty-ltd-2025-fcafc-93.pdf
• ASIC 25-147MR (Finder appeal dismissed): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-147mr-asic-s-appeal-against-finder-wallet-decision-dismissed
• ASIC 25-088MR (BPS Financial [2025] FCAFC 74): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-088mr-full-federal-court-finds-in-favour-of-asic-appeal-concerning-bps-financial-s-use-of-authorised-representative-exemption
• ASIC INFO 225, Digital assets: financial products and services (updated Oct 2025; minor edits Apr 2026): https://www.asic.gov.au/regulatory-resources/digital-transformation/digital-assets-financial-products-and-services
• ASIC 24-186MR (Bit Trade [2024] FCA 953): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-186mr-asic-wins-case-against-kraken-crypto-exchange-operator-for-design-and-distribution-failure
• ASIC 24-274MR (Bit Trade $8m penalty, [2024] FCA 1422): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-274mr-kraken-crypto-exchange-operator-to-pay-8-million-following-asic-enforcement-action

The starting point: a pure collectible NFT (digital art, PFP) is probably not a financial product. But the analysis shifts when:

• Revenue share attached: if the NFT entitles the holder to royalties or protocol fees, consider s 763B (financial investment)
• Fractionalisation: fractional NFTs pooled into a collective are likely an MIS under s 9
• Staking/yield: if the NFT generates returns when staked, the financial investment analysis applies
• Governance rights: NFT grants voting power with economic consequences
• NFT used as a means of payment or investment: may be a 'virtual asset' under the AML/CTF Act, so businesses that exchange, transfer or hold it for customers may have AML/CTF obligations

Three common cases follow: revenue-share NFTs, fractionalised NFTs, and gaming NFTs with in-game economic value.

1. Revenue-Share NFTs: Are We Issuing Financial Products?

Short answer: Very likely a financial product under Australian law.

AU Analysis: s 763B Financial Investment

The Corporations Act s 763B defines a "financial investment" where a person:

• gives money or money's worth (the NFT purchase price) to another person
• and that person uses it, or either side intends it to be used, to generate a financial return or other benefit for the holder (revenue share)
• with no day-to-day control over the use of that contribution

An NFT with embedded revenue share is likely to meet both elements. The holder pays, receives a passive return and doesn't direct how the revenue is generated. That would make it a financial product under Chapter 7.

Key precedent: ASIC v Web3 Ventures Pty Ltd (Block Earner) [2026] HCA 21 (17 June 2026). On 17 June 2026 the High Court ruled for ASIC 7-0, holding that a fixed-yield crypto product was a facility for making a financial investment and a derivative. Similar reasoning may apply to an NFT that pays holders a return generated by the issuer's use of their money.

ASIC's posture: INFO 225 applies a substance-over-form analysis. Calling it an "NFT" doesn't change what it does. INFO 225's NFT example (in-game "skins") concludes those NFTs are unlikely to be a financial investment where the issuer makes no representations that purchase money will generate a return or that prices will rise, "regardless of buyer speculation".

What issuers commonly consider

If the NFT includes a revenue share, it is likely to be treated as a financial product. Options can include licensing, offering only to wholesale clients (s 761G), or restructuring the NFT to remove the passive return.

1. Fractionalised NFTs: MIS Classification Risk

Short answer: High risk of MIS classification. Possibly the clearest case of the three.

The MIS Test (Corporations Act s 9)

A managed investment scheme requires:

1. People contribute money or money's worth to acquire interests
2. Contributions are pooled or used in a common enterprise to produce financial benefits for members
3. Members do not have day-to-day control over the scheme's operation (whether or not they have the right to be consulted or to give directions)

Fractional NFTs are likely to meet each element. Multiple investors buy fractions of a single (or pooled) NFT. The underlying asset is managed by the platform/issuer. Holders can't individually decide to sell, lend, or display the underlying NFT. The operator decides. INFO 225's worked example of fractional interests in real estate reaches a similar conclusion (likely an MIS).

Key authority: the definition of "managed investment scheme" in s 9 of the Corporations Act, and the registration requirement in s 601ED. The test looks at the substance of the arrangement over its label. Fractionalised NFTs can be very hard to distinguish from a pooled investment vehicle.

What This Means

If the scheme must be registered:

• Register the MIS with ASIC (Chapter 5C)
• The responsible entity must be a public company holding an AFS licence (s 601FA)
• Need a compliant Product Disclosure Statement (PDS) for retail clients
• Compliance with the design and distribution obligations (DDO)
• Responsible entity duties

Possible Escape Routes

• Wholesale-only: if no issue of interests would have needed a PDS (for example, every investor is a wholesale client under s 761G), the scheme does not have to be registered (s 601ED(2)). An AFS licence may still be needed

• Small schemes: registration is required if the scheme has more than 20 members or is promoted by a professional scheme promoter (s 601ED(1)). (The '20 issues / $2 million' rule is a separate PDS exemption in s 1012E.) Practical for a test phase, not for a real product launch
• Remove pooling: if each fractional holder gets a distinct, identifiable economic interest (not pooled revenue), the MIS analysis may not apply. Hard to design, but worth exploring

1. Gaming NFTs with In-Game Economic Value

Short answer: It depends on the economic design.

The Spectrum

Pure utility / consumable (low risk):

• NFT is an in-game item (sword, skin, character) with no external economic value
• No cash-out mechanism, no secondary market facilitated by the developer
• Unlikely to be a financial product. It's a digital good (compare INFO 225's game "skins" example)

In-game economy with developer-facilitated cash-out (medium risk):

• Player earns NFTs through gameplay
• Developer operates or endorses a marketplace where NFTs trade for crypto/fiat
• The analysis shifts: if the developer creates the expectation of economic value and controls the ecosystem, ASIC may characterise this as a financial product (under s 763A, a facility for making a financial investment). By contrast, ASIC's INFO 225 Example 2 treats tradeable in-game NFT 'skins' that are not marketed as investments as unlikely to be financial products

Play-to-earn with token rewards (high risk):

• NFT generates token yield (staking, playing)
• Tokens have external exchange value
• The NFT works as an instrument for generating financial returns, so the s 763B financial investment analysis applies

AML/CTF Layer

Whether an NFT is a 'virtual asset' depends on s 5B of the AML/CTF Act. A virtual asset is a digital representation of value that functions as a medium of exchange, store of economic value, unit of account or investment (or that confers governance voting rights), is not government-issued, and can be transferred, stored or traded electronically. Items used only within an electronic game are excluded (s 5B(4)(b)). NFTs that function as a medium of exchange, store of value or investment may be caught. If so, a business that exchanges, transfers or holds them for customers may be providing a designated service. That means enrolling with AUSTRAC (s 51B) and, for virtual asset services, registering on the Virtual Asset Service Provider Register (s 76A), as well as having an AML/CTF program and meeting customer due diligence and reporting obligations.

Summary Matrix

This is general information, not legal advice.

Questions? Email hello@autono.legal.

Sources

• Corporations Act 2001 (Cth), current compilation (C2026C00432, compilation date 19 Sep 2026): https://www.legislation.gov.au/C2004A00818/latest
• ASIC INFO 225, Digital assets: financial products and services (updated Oct 2025; minor edits Apr 2026): https://www.asic.gov.au/regulatory-resources/digital-transformation/digital-assets-financial-products-and-services
• ASIC v Web3 Ventures Pty Ltd [2026] HCA 21 (17 June 2026): https://www.hcourt.gov.au/sites/default/files/eresources/2026-06-17/HCA/Australian%20Securities%20and%20Investments%20Commission%20v%20Web3%20Ventures%20Pty%20Ltd%20%28S136-2025%29%20%5B2026%5D%20HCA%2021.pdf
• ASIC 26-124MR: ASIC successful in High Court Block Earner appeal: https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-124mr-asic-successful-in-high-court-block-earner-appeal
• Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), current compilation (C2026C00447, compilation date 1 Oct 2026): https://www.legislation.gov.au/C2006A00169/latest

If your crypto token is a financial product and you're issuing or selling it to retail clients, you generally must give a Product Disclosure Statement (PDS). The obligation to give a PDS is in ss 1012A–1012C. Section 1013A sets out who must prepare it.

PDS must include (ss 1013C, 1013D and 1013E):

• Significant benefits and risks
• Cost of the product and fees payable (in the prescribed form where the regulations require it)
• Other significant characteristics and features of the product
• Dispute resolution arrangements
• Cooling-off rights (if any)
• Significant taxation implications (general)

Crypto-specific disclosure challenges:

• Smart contract risk (bugs, exploits, upgrade mechanisms)
• Protocol governance risk: who can change the rules?
• Liquidity risk: can holders actually exit?
• Custody risk (key management, counterparty exposure)
• Regulatory risk (the rules are still forming: the new digital asset platform regime starts on 8 April 2027)
• Technology risk (chain forks, consensus failures)

ASIC expectations (RG 168):

A PDS must be clear, concise and effective, with material risks up front and out of the boilerplate. ASIC has intervened on PDS quality for traditional products. Expect the same scrutiny for crypto.

Wholesale exemption (s 761G): If dealing only with wholesale clients (for example, product value of at least $500,000, an accountant's certificate, a professional investor or a sophisticated investor), a PDS is not required. But marketing materials still can't be misleading.

Product Disclosure Statements for Digital Assets: the detail

What matters when you structure a token issuance or dealing arrangement in Australia.

1. When Does the PDS Obligation Apply?

The threshold question is: is the token a financial product? If yes (under the general definition in s 763A or as a specific product listed in s 764A, such as an MIS interest or a derivative), then Part 7.9 can apply when you:

• Issue the product to a retail client, or make an offer to issue it (s 1012B)
• Sell the product to a retail client in certain sale situations, such as off-market sales by a controller or sales amounting to an indirect issue (s 1012C)
• Give personal advice to a retail client recommending that they acquire the product (s 1012A). This one catches intermediaries and platforms. General advice alone does not trigger a PDS obligation

Part 7.9 does not apply to securities (such as shares and debentures), which are dealt with under Chapter 6D (prospectus) instead (s 1010A).

Timing: generally the PDS must be given when the recommendation is made, or at or before the time the offer is made or the product is issued or sold (ss 1012A(3), 1012B(3), 1012C(3)). Where the client makes the offer to acquire, it must be given before the client becomes bound (s 1012B(4)). Section 1015C sets how the PDS is given, and s 1012D sets out situations where a PDS is not required.

1. Mandatory Content Applied to Crypto

Section 1013D (main requirements) and 1013E (other information that might influence a decision) set the minimum. This is how each maps to digital assets:

1. The s 1013E Catch-All

ASIC relies on this section heavily. Beyond the prescribed content, you must disclose any other information that might reasonably be expected to have a material influence on a retail client's decision to acquire the product.

For crypto, this means:

• Key person risk: if the protocol depends on a core dev team, say so
• Token concentration: if 40% of supply sits with founders/VCs, disclose it
• Upgrade/fork risk: can the smart contract be upgraded unilaterally? Proxy patterns? Multisig control?
• Bridge/cross-chain risk: if the token operates across chains, the bridge is a material risk factor
• Regulatory pipeline: if there's a realistic prospect of regulatory change that could affect the product (for example, the Corporations Amendment (Digital Assets Framework) Act 2026, which commences on 8 April 2027), consider disclosing it

1. RG 168: Clear, Concise, Effective

ASIC's Regulatory Guide 168 isn't crypto-specific, but it applies in full:

• Shorter is better: long documents that bury risks make it harder for retail clients to understand the product, and ASIC can use its stop order powers where a PDS is defective
• Use plain language: write "the smart contract may contain undiscovered vulnerabilities that could result in loss of your entire investment", in place of "technological risks may exist"
• Key information upfront: fees summary, risk summary, and product description should be in the first few pages
• No burying: a material risk goes in the risk section with appropriate prominence, never in a footnote on page 47

1. ASIC Stop Orders (s 1020E)

ASIC can make an interim stop order without a hearing, lasting 21 days, if it considers that delay pending a hearing would be prejudicial to the public interest (s 1020E(5)). Stop orders are available where, for example, a PDS is defective. This means:

• Your token sale stops immediately
• ASIC usually announces stop orders publicly, with the reputational damage that follows
• You fix the problem and ask ASIC to revoke the order, or
• ASIC makes a final order after a hearing

ASIC has a separate stop order power under the design and distribution obligations (s 994J), and it has used that one on crypto funds. In October 2022 ASIC made interim stop orders on three Holon funds (bitcoin, ether and Filecoin) because it considered their target market determinations too wide. It extended the orders after a hearing, then revoked them on 14 November 2022 when Holon decided to wind up the funds. No final orders were made (ASIC 22-278MR, editor's note).

1. The Wholesale Exemption (s 761G)

No PDS required for wholesale clients. The main tests in s 761G(7):

• Product value or price at or above the regulated amount, $500,000 for investment-based financial products (s 761G(7)(a); Corporations Regulations regs 7.1.18 and 7.1.19)
• Accountant's certificate (given within the preceding 6 months) that the client has net assets of at least $2.5 million or gross income of at least $250,000 for each of the last 2 financial years (s 761G(7)(c); Corporations Regulations reg 7.1.28)
• Professional investor (s 761G(7)(d); defined in s 9): AFSL holder, listed entity, etc.
• Sophisticated investor (s 761GA): the licensee is satisfied, on reasonable grounds, that the client has enough experience, and the other s 761GA conditions are met

But: Even wholesale-only issuances must comply with:

• Misleading and deceptive conduct prohibitions (s 1041H of the Corporations Act and s 12DA of the ASIC Act; the Australian Consumer Law does not apply to financial services: CCA s 131A)
• Market misconduct prohibitions (Part 7.10)
• AML/CTF obligations (if you're a reporting entity)

An information memorandum isn't legally required for wholesale offers, but it is common practice and can help show what investors were told.

1. Practical Drafting Notes

If you're building a PDS for a crypto product:

1. Get the product characterisation right first: MIS, derivative, security, or novel? This determines which specific disclosure rules layer on top of Part 7.9
2. Smart contract audit: get one, disclose the findings (including limitations), and reference the auditor
3. Material changes: issuers must notify holders of material changes and significant events (s 1017B). A Supplementary PDS (ss 1014A–1014F) can correct a misleading statement or omission, or update the PDS; a Replacement PDS is dealt with separately (ss 1014H–1014L). If a PDS turns out to be defective, s 1016E sets out what the issuer must do with applications not yet satisfied (for example, refund, or give a Supplementary or new PDS and a 1-month withdrawal right). Protocol upgrades, governance changes, and security incidents can all be relevant
4. Digital delivery: s 1015C allows a PDS to be sent to an electronic address the client (or their agent) has nominated. Other methods, such as making it available online, must be agreed to by the client (Corporations Regulations reg 7.9.02A). An electronic PDS must, as far as practicable, be presented so the client can keep a copy (reg 7.9.02B)

Separately, from 8 April 2027 the Corporations Amendment (Digital Assets Framework) Act 2026 requires a licensee issuing a digital asset platform or tokenised custody platform to a retail client to first give a "DAP/TCP Guide" (new s 1020AN).

Bottom line: The PDS regime applies to crypto tokens that are financial products in the same way as to any traditional product. The hard part is mapping blockchain-native concepts into disclosure categories designed for managed funds and insurance policies. Get the mapping wrong and you're looking at a stop order, or worse, a misleading disclosure action.

This is general information, not legal advice.

Questions? Email hello@autono.legal.

Sources

• Corporations Act 2001 (Cth), current compilation (C2026C00432, compilation date 19 Sep 2026): https://www.legislation.gov.au/C2004A00818/latest
• ASIC Act 2001 (Cth), s 12DA: https://www.legislation.gov.au/C2004A00819/latest
• ASIC 22-278MR (Holon interim stop orders): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2022-releases/22-278mr-asic-places-interim-stop-orders-on-holon-crypto-funds
• ASIC INFO 225, Digital assets: financial products and services (updated Oct 2025; minor edits Apr 2026): https://www.asic.gov.au/regulatory-resources/digital-transformation/digital-assets-financial-products-and-services
• Corporations Amendment (Digital Assets Framework) Act 2026 (No. 38 of 2026), Federal Register of Legislation: https://www.legislation.gov.au/C2026A00038/asmade
• Competition and Consumer Act 2010 (Cth), s 131A: https://www.legislation.gov.au/C2004A00109/latest/text
• Corporations Regulations 2001 (Cth), current compilation: https://www.legislation.gov.au/F2001B00274/latest/text

1. Makes a financial investment (s 763B)

The investor: (a) gives money or money's worth (the contribution) to another person, and any of the following apply: the other person uses the contribution to generate a financial return or other benefit for the investor; the investor intends that the other person will do so; or the other person intends that the contribution will be used that way (even if no return is in fact generated); AND (b) the investor has no day-to-day control over the use of the contribution to generate the return or benefit.

Application to tokens: A token whose holders' money is used, or intended to be used, to generate a return for them may well be caught. Examples: governance tokens with fee accrual, staking rewards that depend on validator performance, and yield-bearing pooled tokens.

2. Manages financial risk (s 763C)

The facility manages risk by hedging, shifting, or pooling exposure.

• Crypto derivatives, synthetic assets, options protocols, perpetual swaps.

3. Makes non-cash payments (s 763D)

• Stablecoins used for payment settlement, crypto payment processors.

Key carve-outs:

• Incidental products (s 763E)
• Single-payee payment facilities (s 763D(2)(a)(i))
• Specific exclusions in s 765A, such as credit facilities (s 765A(1)(h)(i))
• Buying real property or bullion is not a financial investment (s 763B, Note 2)

s 763B: Financial Investment (the main limb for tokens)

The test has two parts, and both must be satisfied:

Element (a): Contribution of money or money's worth, used or intended to generate a return

• "Money's worth" is broad. INFO 225 describes it as "a broad concept that includes a wide range of potential types of contributions", and in its staking example treats a digital asset contributed by a customer as money's worth. Paying ETH to mint a token = contribution.
• Fiat on-ramp purchases obviously qualify.
• Many token projects can meet this element. If the protocol or team takes contributions and uses them, or intends to use them, to generate a return or other benefit for holders, the element is likely to be satisfied.
• Nuance: The test is met if the provider uses the contribution to generate a return, or if either the investor or the provider intends it to be used that way (s 763B(a)(i)–(iii)). So the investor's own intention can matter, not just the issuer's. In practice, if your whitepaper says "staking yields" or "protocol revenue sharing", expect ASIC to treat that as evidence of intent.
• ASIC's INFO 225 notes that "often the price or value of a digital asset is directly or indirectly linked to the success of a business or project (an enterprise)", particularly where tokens are issued to raise funds for that enterprise.
• In Block Earner, the High Court confirmed it was sufficient that investors' funds were used or intended to be used to generate a return for both the investor and the issuer (as summarised in ASIC's media release).

Element (b): No day-to-day control

• This element mirrors the managed investment scheme test. If the token holder can't direct how their contribution is used day to day, it is satisfied.
• DAO governance is unlikely to be day-to-day control. INFO 225 states that "the ability to withdraw from a facility or vote on matters is not sufficient for a person to be considered as having day-to-day control of the use of the funds". That is guidance, not law, and no Australian case has decided the point for DAO voting.
• The element is more likely to fail where the holder directs how their own contribution is used day to day.

The Combined Effect

If you're launching a token where:

• People pay money/crypto for it
• Your team builds, deploys, or manages something that drives value
• Holders don't run daily operations

then it is likely a financial product, and you need an AFSL (or an exemption).

s 763C: Managing Financial Risk

This limb gets less attention, but it matters more and more for DeFi:

• The facility must have the effect of managing financial risk (hedging, shifting, or pooling).
• Perpetual swap protocols: likely to be a derivative or other financial product, depending on terms. Derivatives are a listed financial product (s 764A(1)(c), s 761D).
• Mutual cover protocols: pooling risk. Contracts of insurance are themselves listed financial products (s 764A(1)(d)); whether the Insurance Act 1973 also applies depends on the arrangement.
• Options and structured products: hedging + pooling. Likely to be a derivative or other financial product, depending on terms.
• Hedging bots/services: If you provide an automated hedging tool where users deposit and the protocol manages exposure, s 763C may apply even if s 763B doesn't.

s 763D: Non-Cash Payment Facilities

• Stablecoins used for payment settlement (not just store of value) are potentially caught here.

• INFO 225 says a digital asset used to make payments is not necessarily a non-cash payment facility itself, but ASIC considers that certain stablecoins are likely to be one (s 763D). ASIC has also granted class relief for distributors of certain eligible stablecoins and wrapped tokens (ASIC Corporations (Stablecoin and Wrapped Token Relief) Instrument 2025/867).
• Exclusion: If the token is only used to pay one person (for example, purchasing services from the issuer), the 'single payee' carve-out in s 763D(2)(a)(i) or the incidental product exclusion in s 763E may apply. Both are narrow, so check the facts carefully.

s 765A exclusions

Section 765A lists specific things that are not financial products. Two that come up in crypto structuring:

Separately, s 763E excludes a financial product that is only incidental to a non-financial main purpose. That is the provision most "ordinary course of business" arguments rely on.

The utility token defence comes up often. ASIC looks at the rights and benefits attached to the token, including how it is marketed and how it is used in practice (INFO 225 refers to how a facility is "commonly" used by people who acquire it).

Key ASIC Guidance

From 8 April 2027, platforms that hold tokens for clients may need an AFS licence under the Corporations Amendment (Digital Assets Framework) Act 2026 even where the tokens themselves are not financial products.

Bottom line: s 763A is wide. The three limbs (investment, risk management, payment) cover most token designs with economic substance, and the High Court's 2026 Block Earner decision confirms the breadth of s 763B. The exclusions are narrow. If a token has economic substance, it is worth having its classification checked early.

This is general information, not legal advice.

Questions? Email hello@autono.legal.

Sources

• Corporations Act 2001 (Cth), current compilation (C2026C00432, compilation date 19 Sep 2026): https://www.legislation.gov.au/C2004A00818/latest
• ASIC INFO 225, Digital assets: financial products and services (updated Oct 2025; minor edits Apr 2026): https://www.asic.gov.au/regulatory-resources/digital-transformation/digital-assets-financial-products-and-services
• ASIC 26-124MR: ASIC successful in High Court Block Earner appeal: https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-124mr-asic-successful-in-high-court-block-earner-appeal
• ASIC INFO 294: FAQs: AFS licence applications: https://www.asic.gov.au/for-finance-professionals/afs-licensees/applying-for-and-managing-an-afs-licence/faqs-afs-licence-applications
• ASIC CP 392 (15 Oct 2026): https://download.asic.gov.au/media/0pqj5lgc/cp392-published-15-october-2026.pdf
• ASIC 24-186MR (Bit Trade [2024] FCA 953): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-186mr-asic-wins-case-against-kraken-crypto-exchange-operator-for-design-and-distribution-failure
• ASIC v Web3 Ventures Pty Ltd [2026] HCA 21 (17 June 2026): https://www.hcourt.gov.au/sites/default/files/eresources/2026-06-17/HCA/Australian%20Securities%20and%20Investments%20Commission%20v%20Web3%20Ventures%20Pty%20Ltd%20%28S136-2025%29%20%5B2026%5D%20HCA%2021.pdf
• Corporations Amendment (Digital Assets Framework) Act 2026 (No. 38 of 2026), Federal Register of Legislation: https://www.legislation.gov.au/C2026A00038/asmade
• Corporations Regulations 2001 (Cth), current compilation: https://www.legislation.gov.au/F2001B00274/latest/text

s 766B: Financial product advice

General or personal recommendations about crypto tokens that are financial products. Includes: research reports, token ratings, portfolio recommendations.

• Trigger: a recommendation or statement of opinion that is intended to influence a decision about a financial product, or could reasonably be regarded as intended to do so.

s 766C: Dealing in a financial product

Applying for, acquiring, issuing, varying or disposing of a financial product, and arranging for someone else to do so. Covers:

• Token issuance (ICO/TGE)
• Arranging trades for clients (operating a trading venue may instead require an Australian market licence: s 767A, s 791A)
• Arranging secondary market trades

s 766D: Making a market

Regularly stating prices at which you will acquire or dispose of financial products on your own behalf, where others reasonably expect to transact at those prices.

• Exchanges that quote their own prices, OTC market makers and, possibly, AMM protocols with identifiable operators (see the open question below).

s 766E: Custodial or depository service

Holding financial products on behalf of another.

• Custodial wallets, institutional custody, exchange wallets holding user funds.

s 766F: Crowd-funding service

• Publishing a CSF offer document for a crowd-sourced funding offer of a company's securities under Part 6D.3A, and taking applications.

Practical impact: A single crypto business may trigger three or four of these at once. Your AFSL application must cover each financial service you provide.

s 766A to 766F: statutory detail and crypto application

s 766A: Providing a financial service

This is the definitional provision. Under s 766A(1) you provide a "financial service" if you provide financial product advice, deal in a financial product, make a market, operate a registered scheme, provide a custodial or depository service, provide a crowd-funding service, or engage in certain other listed or prescribed conduct. Operating a financial market or a clearing and settlement facility is not in that list. It is regulated separately, under the market and CS facility licensing regimes in Part 7.2 and Part 7.3. s 766A matters because it is what links conduct to the AFSL requirement in s 911A. Conduct can be more than one financial service at once (s 766A(5)).

s 766B: Financial product advice

There are two sub-categories, with very different compliance burdens:

General advice (s 766B(4)): A recommendation or opinion about a financial product that is not personal advice. When given to a retail client, the provider must give a general advice warning (s 949A).

• Crypto example: A DeFi analytics platform that publishes "Token X is undervalued based on TVL metrics" gives general advice if Token X is a financial product.

Personal advice (s 766B(3)): The provider has considered one or more of the client's objectives, financial situation and needs, or a reasonable person might expect them to have done so.

• Crypto example: A robo-advisor that asks for your risk tolerance and then recommends a portfolio of tokenised managed funds gives personal advice. For retail clients, that triggers the best interests duty (s 961B) and the appropriate advice obligation (s 961G).

The trap for crypto: Many platforms sit close to the line. If your UI asks users any questions about their goals before presenting products, ASIC may characterise the output as personal advice, even if you call it "general." One narrow carve-out: asking questions solely to work out whether someone is in a product's target market, and telling them the result, is not of itself personal advice (s 766B(3A)).

s 766C: Dealing in a financial product

Section 766C(1) lists the conduct (whether as principal or agent):

1. Applying for or acquiring a financial product
2. Issuing a financial product
3. For securities and MIS interests, underwriting them
4. Varying a financial product
5. Disposing of a financial product

Two capacities:

• Dealing on own behalf: a person dealing on their own behalf is generally taken not to deal, unless they are an issuer dealing in its own products (s 766C(3))
• Dealing on behalf of another: acting as agent/intermediary (broker, exchange matching engine)

Crypto applications:

• Token issuer conducting a TGE: issuing, on its own behalf
• DEX aggregator routing swaps through liquidity pools: arguably acquiring or disposing on behalf of another
• Exchange operator matching buyer and seller: arranging acquisition and disposal, on behalf of another
• Staking-as-a-service where the provider stakes on your behalf and returns yield = potentially dealing (including varying) if the staking arrangement itself is a financial product

Arranging is dealing: Under s 766C(2), arranging for a person to engage in any of that conduct is also dealing in a financial product, unless the actions amount to providing financial product advice. INFO 225 makes the same point. Introducing, referral and "facilitation" models therefore need to be checked against s 766C(2), not just s 766C(1). Note also that providing a crowd-funding service is not dealing (s 766C(2A)).

s 766D: Making a market in a financial product

A person makes a market if, through a facility, at a place or otherwise, they regularly state the prices at which they propose to acquire or dispose of financial products on their own behalf, and other persons have a reasonable expectation that they will be able to regularly effect transactions at those prices (s 766D(1)).

Two elements:

1. Regularity of price statements: systematic, not one-off
2. Reasonable expectation that others can transact at those prices

Crypto applications:

• CEX with order book where the exchange itself places standing bids/asks (proprietary trading) = market making
• AMM protocol operator: this is the open question. The protocol algorithmically quotes prices, but is the operator/deployer making a market? ASIC hasn't published definitive guidance (INFO 225 expressly does not comment on DeFi licensing), but the logic is: if an identifiable entity deploys, controls parameters (fee tiers, concentrated liquidity ranges), and profits from the spread, they look like a market maker

• OTC desks quoting firm two-way prices to institutional counterparties = clear market making
• Passive liquidity providers on an AMM: likely not market makers individually (they're depositing assets into a pool, not quoting prices), but the pooled mechanism as operated by its controller may be

s 766E: Custodial or depository service

A person provides this service if, under an arrangement, a financial product or a beneficial interest in a financial product is held by the provider in trust for, or on behalf of, the client or someone the client nominates (s 766E(1)).

Crypto applications:

• Custodial exchange wallets: if a user deposits crypto that is a financial product and the exchange holds it on the user's behalf, that is a custodial service
• Institutional custody services for AU-regulated products = custodial service
• Smart contract escrow: if an identifiable party controls the escrow contract and holds assets on behalf of transacting parties, arguably custodial. If the contract is fully autonomous with no controller, the analysis is less clear
• Non-custodial wallets (user holds keys): generally not a custodial service, because no one holds assets on behalf of another

Exclusions (s 766E(3)) include operating a CS facility, operating or holding the assets of a registered scheme, superannuation trustees, and services to a related body corporate. There is no general 'incidental holding' exclusion. "Incidental custody" is relevant to ASIC's net tangible assets requirements for custodians (RG 166). INFO 225 says a custodian typically needs at least $10 million in net tangible assets, but where custody is 'incidental' the NTA requirement is $150,000 (or may be nil if you do not hold physical custody), referring to Table 15 in RG 166.

s 766F: Crowd-funding service

A person provides a crowd-funding service if a CSF offer document for a CSF offer of a company's securities is published on a platform the person operates, and applications may be made to the person for the issue of the securities (s 766F(1), Part 6D.3A).

There are strict requirements. The issuer must be an eligible CSF company, which among other things requires consolidated gross assets and annual revenue each under $25 million unless the regulations prescribe otherwise (s 738H). The offer is subject to a $5 million issuer cap over 12 months (s 738G(2)), and the platform operator must hold an AFSL authorising it to provide crowd-funding services.

Crypto application: Token launchpads hosting capital raises where the token is a security (equity token or debenture). If the token meets the Corporations Act definition of a share or debenture, and the raise is structured as a CSF offer through a platform, this provision potentially applies. INFO 225 notes that an ICO is not a CSF offer just because it is described as "crowd funding".

Limitation: Most utility token sales won't trigger s 766F because the token isn't a share or debenture. Tokenised equity raises (e.g., issuing tokens representing shares in an AU company) are within scope only if they are made as CSF offers under Part 6D.3A.

Coming in 2027: new digital asset authorisations

The Corporations Amendment (Digital Assets Framework) Act 2026 creates new categories for digital asset platforms and tokenised custody platforms. The Act commences on 8 April 2027. ASIC's CP 392 (15 October 2026) proposes that existing operators apply by 7 October 2027 and can keep operating while ASIC assesses their application. Platform businesses should map their services against both the current s 766A categories and the new authorisations.

Practical Mapping for AFSL Applications

Key ASIC Guidance:

• RG 36: Licensing, financial product advice and dealing
• INFO 225: Digital assets, financial products and services (updated October 2025)
• RG 104: AFS licensing, meeting the general obligations
• RG 166: AFS licensing, financial requirements (custody NTA)
• CP 392: Implementing the new digital asset laws (consultation; feedback due 27 November 2026)
• Corporations Amendment (Digital Assets Framework) Act 2026: new digital asset platform and tokenised custody platform products from 8 April 2027

This is general information, not legal advice.

Questions? Email hello@autono.legal.

Sources

• Corporations Act 2001 (Cth), current compilation (C2026C00432, compilation date 19 Sep 2026): https://www.legislation.gov.au/C2004A00818/latest
• ASIC INFO 225, Digital assets: financial products and services (updated Oct 2025; minor edits Apr 2026): https://www.asic.gov.au/regulatory-resources/digital-transformation/digital-assets-financial-products-and-services
• ASIC CP 392 (15 Oct 2026): https://download.asic.gov.au/media/0pqj5lgc/cp392-published-15-october-2026.pdf
• ASIC 26-245MR (15 Oct 2026): ASIC consults on implementation of new digital asset laws: https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-245mr-asic-consults-on-implementation-of-new-digital-asset-laws
• Corporations Amendment (Digital Assets Framework) Act 2026 (No. 38 of 2026), Federal Register of Legislation: https://www.legislation.gov.au/C2026A00038/asmade

If yes: an AFSL (or an exemption) is generally required, Chapter 7 disclosure can apply, and ASIC has full jurisdiction. If no: Chapter 7 does not apply, but the Australian Consumer Law and, if you provide virtual asset services, the AML/CTF Act may still apply.

Three pathways to 'financial product' (s 763A):

1. Financial investment (s 763B): contributes value, the contribution is used (or intended) to generate a return, no day-to-day control
2. Manages financial risk (s 763C): for example insurance or hedging. (Derivatives are separately listed as financial products: s 764A(1)(c), s 761D.)
3. Non-cash payment (s 763D): payment or settlement functionality

ASIC position (INFO 225): Substance over label. Calling it 'utility' does not override economic reality.

1. The Core Question

Whether a token is a financial product is still decided under the existing Chapter 7 definitions. Separately, the Corporations Amendment (Digital Assets Framework) Act 2026 (No. 38 of 2026) brings digital asset platforms and tokenised custody platforms into AFS licensing from 8 April 2027. It does not replace the token-by-token question below. The question is still: does the token, or the arrangement around it, fall within one of the statutory categories in Part 7.1 Division 3?

If yes: a person who carries on a financial services business in Australia (for example dealing, advising or making a market) generally needs an AFS licence or an exemption. Breach is an offence (s 911A(1); s 1311(1)) and a civil penalty contravention (s 911A(5B)).

Where the ASIC no-action position stands. ASIC's class no-action position for digital asset businesses required firms to lodge an AFS licence application, or make another qualifying arrangement, by 30 September 2026. That window has closed. Firms that qualified stay covered until ASIC decides their application. The position never applied to crypto lending or earn products. We have not found a successor no-action position.

1. Statutory Framework: s 763A and the Category Approach

Section 763A provides the umbrella definition. A "financial product" is a facility through which a person:

1. Makes a financial investment (s 763B)
2. Manages financial risk (s 763C)
3. Makes non-cash payments (s 763D)

A crypto token is assessed against each limb. There is no "crypto exemption."

2.1 Financial Investment (s 763B): the main limb for tokens

A person makes a financial investment if:

(a) they give money or money's worth (the contribution) to another person, and any of these apply: the other person uses the contribution to generate a financial return or other benefit for the investor; the investor intends that it will be used that way; or the other person intends that it will be used that way (even if no return is in fact generated); and (b) the investor has no day-to-day control over the use of the contribution to generate the return or benefit.

When tokens trigger this:

• Token presales where funds are used to build a platform: contribution, intended return (e.g. expected appreciation), no control
• Yield/earn products: deposit tokens, receive a return, no control (Block Earner [2026] HCA 21; compare Finder Earn, which was held not to be a debenture)
• Staking-as-a-service: ASIC's INFO 225 (Example 4) treats certain managed staking facilities as likely to be facilities for making a financial investment and potentially managed investment schemes

• Governance tokens alone: likely not, unless bundled with revenue share or yield expectations. INFO 225 says the ability to vote on matters is not enough to give a person day-to-day control

2.2 Managing Financial Risk (s 763C): derivatives

Derivatives are listed specifically (s 764A(1)(c)). A derivative is an arrangement where consideration is provided at a future time and the amount varies by reference to the value of something else (s 761D). This captures:

• Crypto CFDs: generally derivatives (s 761D)
• Crypto futures/options: derivatives
• Margin trading products: may be derivatives or another financial product, depending on their terms. In ASIC v Bit Trade Pty Ltd [2024] FCA 953, a crypto margin extension product was held to be a credit facility. Credit facilities are excluded from the Corporations Act definition of financial product (s 765A(1)(h)(i)), but the design and distribution obligations still applied because Part 7.8A also covers ASIC Act financial products (s 994AA)
• Synthetic tokens pegged to real-world assets
• Wrapped tokens: INFO 225 says many wrapped tokens are likely to be derivatives. ASIC has granted class relief for distributors of certain eligible stablecoins and wrapped tokens

2.3 Non-Cash Payment Facility (s 763D)

A token used to make payments (not investment) may fall here. INFO 225 says certain stablecoins are likely to be non-cash payment facilities. This is less commonly triggered for speculative tokens.

1. Specific Product Categories

Beyond the functional test, tokens can also be captured as specific product types (mostly listed in s 764A; the non-cash payment row is the s 763D functional limb, included for comparison):

1. The Key Australian Cases (2022 to 2026)

ASIC v Web3 Ventures Pty Ltd (Block Earner) [2026] HCA 21 (17 June 2026)

• Product: "Earner" (users deposit crypto, receive a fixed yield)
• History: At first instance the Federal Court found Block Earner had engaged in unlicensed financial services conduct and operated an unregistered managed investment scheme ([2024] FCA 64), but relieved it from a penalty ([2024] FCA 578). In 2025 the Full Court overturned the findings that Earner was a financial product and a managed investment scheme ([2025] FCAFC 58).
• Held: On 17 June 2026 the High Court ruled for ASIC 7-0. The Earner product was a financial product: a facility for making a financial investment, and a derivative. The High Court did not revive the first-instance managed investment scheme finding. ASIC said the matter would return to the Full Court for ASIC's appeal against the penalty judgment (26-124MR).
• Principle: Fixed-yield crypto products are likely to be financial products, whatever they are called. ASIC's media release notes the High Court said it was enough that funds were used, or intended to be used, to generate a return for both the investor and the issuer.

ASIC v Finder Wallet Pty Ltd [2024] FCA 228

• Product: "Earn" (deposit crypto, receive a return)
• Held: Not a debenture. ASIC's appeal was dismissed (ASIC v Wallet Ventures Pty Ltd [2025] FCAFC 93, 24 July 2025). Customers transferred a stablecoin (TrueAUD), which the Full Court treated as property, so the arrangement was not a deposit or loan of money.
• Principle: The debenture definition has limits. Small differences in product terms can change the result. Finder was decided on the debenture point only. Block Earner shows the same kind of product can still be caught under s 763B.

ASIC v Bit Trade Pty Ltd [2024] FCA 953

• Product: Margin extension product offered by Bit Trade on its crypto exchange
• Held: A credit facility. Bit Trade breached the design and distribution obligations by offering it to retail clients without a target market determination. The court later ordered an $8 million penalty ([2024] FCA 1422).
• Principle: Margin products on a crypto exchange bring financial services obligations, including the design and distribution obligations.

ASIC v BPS Financial Pty Ltd [2024] FCA 457; [2025] FCAFC 74

• Product: Qoin wallet and Qoin token
• Point: The Court found the Qoin Wallet was a non-cash payment facility, and that BPS engaged in unlicensed and misleading conduct, except for the 10 months it was an authorised representative of a licensee. The Full Court reversed that exception: BPS issued the wallet on its own behalf, so it needed its own AFS licence ([2025] FCAFC 74).

Managed investment scheme: s 9 definition and s 601ED registration

• The elements: (1) people contribute money or money's worth to acquire rights to benefits produced by the scheme, (2) contributions are pooled or used in a common enterprise to produce financial benefits for members, and (3) members do not have day-to-day control over the operation of the scheme (whether or not they can be consulted or give directions).

1. The Decision Tree

Is the token itself a security (share, debenture, debt)?
  └─ Yes -> Financial product (s 764A)
  └─ No ↓

Does the arrangement involve pooled funds, a common enterprise,
and the user lacks day-to-day control? (MIS test)
  └─ Yes -> Managed Investment Scheme -> Financial product
  └─ No ↓

Is the user's contribution used (or intended) to generate a
return, with no day-to-day control? (s 763B)
  └─ Yes -> Facility for making a financial investment
  └─ No ↓

Does the product's value derive from an underlying asset?
(CFDs, margin, futures, synthetic, many wrapped tokens)
  └─ Yes -> Derivative -> Financial product
  └─ No ↓

Is the token used to make payments (not investment)?
  └─ Yes -> Possibly non-cash payment facility
  └─ No ↓

Pure utility token with no financial return expectation,
no pooling, no derivative characteristics
  └─ Probably NOT a financial product (but ASIC may still
     look at the substance)

1. ASIC's Regulatory Posture

ASIC has been clear: substance over form. INFO 225 (Digital assets: Financial products and services) says: "The rights and benefits attached to digital assets, or products involving digital assets, are a key consideration in assessing the legal status of those digital assets and products." It adds that a reference to the legal status of a "token" "should generally be understood as a reference to the legal status of the overall arrangement that includes the token as offered to the public."

ASIC describes the financial product definition as broad and technology-neutral. After the High Court's Block Earner decision, ASIC said this "reinforces ASIC's long-standing position that the definition of financial product is broad and technology neutral". The label "utility token" or "governance token" does not decide the question. The economic substance does.

1. The ASIC / AUSTRAC Overlap

A crypto token business can simultaneously be:

• Dealing in a financial product under Chapter 7 (requiring an AFSL from ASIC); and
• Subject to AML/CTF obligations under the AML/CTF Act (if it provides virtual asset services, requiring enrolment with AUSTRAC and registration on the Virtual Asset Service Provider Register: ss 51B, 76A, 76B)

Many crypto businesses carry both sets of obligations.

1. Bottom Line

The short version: if holders expect a financial return and don't control how their contribution is used, the token is very likely a financial product. The High Court's Block Earner decision confirms how wide the definitions are, and ASIC has shown it will litigate.

This is general information, not legal advice.

Questions? Email hello@autono.legal.

Sources

• Corporations Act 2001 (Cth), current compilation (C2026C00432, compilation date 19 Sep 2026): https://www.legislation.gov.au/C2004A00818/latest
• ASIC INFO 225, Digital assets: financial products and services (updated Oct 2025; minor edits Apr 2026): https://www.asic.gov.au/regulatory-resources/digital-transformation/digital-assets-financial-products-and-services
• ASIC class no-action letter for digital asset businesses (updated June 2026): https://download.asic.gov.au/media/qqefxfcj/asic-class-no-action-letter-for-digital-asset-businesses-update-june-2026.pdf
• ASIC news item: no-action position extended to 30 September 2026: https://www.asic.gov.au/about-asic/news-centre/news-items/asic-extends-no-action-position-for-digital-asset-businesses-to-30-september-2026
• ASIC 26-245MR (15 Oct 2026): ASIC consults on implementation of new digital asset laws: https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-245mr-asic-consults-on-implementation-of-new-digital-asset-laws
• Corporations Amendment (Digital Assets Framework) Act 2026 (No. 38 of 2026), Federal Register of Legislation: https://www.legislation.gov.au/C2026A00038/asmade
• ASIC CP 392 (15 Oct 2026): https://download.asic.gov.au/media/0pqj5lgc/cp392-published-15-october-2026.pdf
• ASIC v Web3 Ventures Pty Ltd [2026] HCA 21 (17 June 2026): https://www.hcourt.gov.au/sites/default/files/eresources/2026-06-17/HCA/Australian%20Securities%20and%20Investments%20Commission%20v%20Web3%20Ventures%20Pty%20Ltd%20%28S136-2025%29%20%5B2026%5D%20HCA%2021.pdf
• ASIC 26-124MR: ASIC successful in High Court Block Earner appeal: https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-124mr-asic-successful-in-high-court-block-earner-appeal
• Web3 Ventures v ASIC [2025] FCAFC 58 (judgment, ASIC-hosted): https://download.asic.gov.au/media/dqslt5v3/25-062mr-asic-v-web3-ventures-pty-ltd-2025-fcafc-58.pdf
• ASIC 25-062MR (Full Court Block Earner decision): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-062mr-full-federal-court-finds-block-earner-did-not-engage-in-unlicensed-conduct
• ASIC 24-019MR (first-instance Block Earner decision, [2024] FCA 64): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-019mr-court-finds-block-earner-needed-financial-services-licence-to-offer-earner-crypto-product
• ASIC 24-045MR (Finder Wallet [2024] FCA 228): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-045mr-federal-court-finds-finder-earn-product-was-not-a-financial-product
• ASIC 25-147MR (Finder appeal dismissed): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-147mr-asic-s-appeal-against-finder-wallet-decision-dismissed
• ASIC v Wallet Ventures Pty Ltd [2025] FCAFC 93 (judgment, ASIC-hosted): https://download.asic.gov.au/media/wnwctatp/25-147mr-asic-v-wallet-ventures-pty-ltd-2025-fcafc-93.pdf
• ASIC 25-088MR (BPS Financial [2025] FCAFC 74): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-088mr-full-federal-court-finds-in-favour-of-asic-appeal-concerning-bps-financial-s-use-of-authorised-representative-exemption
• ASIC 24-186MR (Bit Trade [2024] FCA 953): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-186mr-asic-wins-case-against-kraken-crypto-exchange-operator-for-design-and-distribution-failure
• ASIC 24-274MR (Bit Trade $8m penalty, [2024] FCA 1422): https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-274mr-kraken-crypto-exchange-operator-to-pay-8-million-following-asic-enforcement-action
• Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), current compilation (C2026C00447, compilation date 1 Oct 2026): https://www.legislation.gov.au/C2006A00169/latest
• Competition and Consumer Act 2010 (Cth), s 131A: https://www.legislation.gov.au/C2004A00109/latest/text
• ASIC v BPS Financial Pty Ltd [2025] FCAFC 74 (judgment, ASIC-hosted): https://download.asic.gov.au/media/b1wos334/25-088mr-australian-securities-and-investments-commission-v-bps-limited-2025-fcafc-74.pdf