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s 763A: Financial Product Definition

A token whose holders' money is used, or intended to be used, to generate a return for them may well be caught.

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Section 763A is the starting point. A facility through which, or through the acquisition of which, a person:

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:

ExclusionWhat It CoversCrypto Application
s 765A(1)(h)(i)Credit facilities (as defined in reg 7.1.06 of the Corporations Regulations), other than margin lendingSome lending arrangements. Bit Trade's margin extension product was held to be a credit facility
s 765A(1)(s)Interests in an unregistered MIS that does not have to be registered under s 601ED(1)Small private pooled arrangements

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

DocumentRelevance
INFO 225 (Digital assets: financial products and services)Foundation guidance: when tokens = financial products. Last updated October 2025, with minor edits in April 2026
INFO 294 FAQs: AFS licence applicationsProcedural guidance on applying (applications lodged through the ASIC Regulatory Portal since 16 June 2025)
RG 172 (Financial markets: Domestic and overseas operators)Relevant if operating a crypto exchange
CP 392 (15 October 2026)ASIC consultation on implementing the new digital asset platform and tokenised custody platform laws

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 [email protected].

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