Australia to Regulate Crypto by Economic Function, Focusing on Intermediaries

Australia’s regulator and lawmakers are shifting to a function-based approach to crypto regulation, prioritising an asset’s economic role over blockchain technology. Rhys Bollen of the Australian Securities and Investments Commission (ASIC) argued that tokens should be classified by function — for example as securities, payment instruments or managed investment schemes — so existing financial laws and enforcement tools apply. He emphasised that most consumer harm arises from intermediaries (exchanges, custodians, lenders and yield providers), and urged regulators to target platforms and intermediaries to protect consumers, market integrity and financial stability. The Digital Assets Framework Bill proposes targeted amendments to the Corporations Act 2001 to fold digital-asset platforms into established rules. ASIC Information Sheet 225 supports function-based classification and signals most stablecoin issuers will require licences, with transitional compliance measures expected for some stablecoin and wrapped token providers. Bollen warned bespoke crypto laws risk regulatory arbitrage and recommended focusing enforcement on intermediaries rather than treating crypto as a wholly new legal category. Key implications for traders: increased licensing and oversight for exchanges, custodians and stablecoin issuers could raise operational costs and compliance scrutiny, potentially reducing counterparty risk over time but creating short-term market uncertainty around liquidity and access to certain services.