Mandy Jiang
We are pleased to see the government’s progress in regulating digital assets through two recently released draft legislation packages: (1) digital asset and tokenisation platforms, and (2) Tranche 1 of Payment Services Modernisation. The DAP/TCP draft legislation represents a significant step forward in clarifying the regulatory treatment of digital asset custody providers. However, we have identified some definitional issues and gaps that should be addressed to ensure adequate customer protection.
While the Bill establishes the regulatory perimeter and core licensing mechanics, many critical details—including licensing conditions, custody standards, and disclosure formats—have been delegated to ASIC for future guidance. Consequently, whether this legislation achieves its stated objectives of fostering innovation and supporting sectoral growth and competition will largely depend on the timeliness and quality of ASIC’s forthcoming guidance.
This draft legislation represents a significant step towards clarifying the regulatory landscape for digital assets particularly for custody providers, which is a necessary condition for mainstream institutional adoption and safer retail participation. However, substantial work remains to transform our financial system and fully integrate a digital asset ecosystem. For instance, enabling investors to obtain financial advice on digital assets would provide additional protection and increase consumer confidence in entering this sector. It focuses primarily on tokenisation platform providers, which are very narrowly defined, but it does provide much-needed clarity on the regulatory treatment of tokenised asset providers. Under current law, there is uncertainty around how tokenised RWAs should be classified as financial products and what authorisation is required to provide this service.
The transition period will largely depend on how quickly ASIC can issue the requisite guidance on licensing requirements and process new license applications. Based on the draft legislation, we expect ASIC’s new asset-holding standards to be more supportive of digital asset custodians. Given that Cloudtech already operates its custody services under current AFSL and RG133 requirements, we do not anticipate a difficult transition to the new regime.
By Mandy Jiang, Chief Financial Officer and Executive Director