Technology is reshaping financial services faster than ever, while regulation works to catch up. Our insight gives an overview of regulatory developments that we expect will shape how financial institutions conduct business in Australia in 2026 and beyond.
RBA now has more regulatory power
The Treasury Laws Amendment (Payments System Modernisation) Act 2025 (Cth) took effect on 19 December 2025, significantly expanding the Reserve Bank of Australia’s (RBA) regulatory reach under the Payment Systems (Regulation) Act 1998 (Cth). The Act broadened the definitions of “payment system” and “participant” to capture new and emerging service (including digital wallets, Buy Now, Pay Later (BNPL) providers, and stablecoin-based platforms) ensuring they fall within the RBA’s oversight. It also introduced powerful tools: the Treasurer may now designate critical payment systems for enhanced scrutiny, and the RBA can impose enforceable undertakings and civil penalties, bolster dispute-resolution rules, and increase penalties to manage risk more effectively.
Incoming amendments to the Corporations Act to capture certain digital assets
In an effort to modernise Australia’s financial payment system, the Treasury announced on 9 October 2025 that it would be focussing on two tranches of reform (consultation for Tranche 1(a) in 2025 and Tranche 1(b) and 2 in 2026).
At a high level:
- Tranche 1(a) proposes a modernised framework of graduated obligations including requiring payment service providers (PSPs) that perform certain functions to obtain an Australian Financial Service Licence (AFSL), Australian Prudential Regulation Authority (APRA) powers for major stored value facility (SVF) providers (including major tokenised SVF providers) and designated PSPs and a rule making power in introduce a mandatory ePayments code;
- Tranche 1(b) will cover more licensing obligations such as safeguarding payment‑related money, exemptions and exclusions, expanded APRA powers, a framework for unclaimed monies, a new rule‑making power to help introduce a mandatory ePayments code and transitional arrangements; and
- Tranche 2 will consider more reform including common access requirements and an industry standard setting body as well as a review of the ePayments Code.
Corporations Amendment (Digital Assets Framework) Bill 2025 (Cth)
The Corporations Amendment (Digital Assets Framework) Bill 2025 (Cth) is set to extend the Australian Financial Services Licence (AFSL) regime in a major uplift to capture digital asset platforms, tokenised custody providers and related services.
If passed, we expect the following reforms to be introduced:
- Expansion of the AFSL regime: Digital asset platforms (DAP), tokenised custody providers (TCP) and related services will be brought within the definition of “financial products,” requiring operators to obtain an AFSL;
- New platform-specific obligations: AFSL holders will face tailored requirements, including compliance with Australian Securities and Investments Commission (ASIC)-issued custody, transaction and settlement standards, as well as maintaining platform rules;
- Introduction of the DAP/TCP Guide: For retail clients, disclosure will be by way of a new “DAP/TCP guide” outlining platform risks, fees, governance rights and complaint processes;
- Enhanced ministerial powers: The Commonwealth Treasurer may declare certain digital asset platforms to be financial markets or clearing and settlement facilities, exempt classes of platforms, or prohibit specific products from being offered;
- Clear carve-outs: Exemptions will apply to public digital token infrastructure, custodial staking arrangements, low-value platforms and incidental service providers;
- Extended regulatory powers: ASIC’s product intervention and market misconduct rules will apply to captured platforms in certain circumstances; and
- Transition period: A 12-month lead-in from Royal Assent, followed by a 6-month grace period for AFSL compliance.
You can read more about this reform in greater detail in our article on Tranche 1(a): Corporations Amendment (Digital Assets Framework) Bill 2025 (Cth) to be released this month.
INFO 225 and No Action by ASIC letter
On 29 October 2025, ASIC updated Information Sheet 225: Crypto-assets (INFO 225) and issued a class no-action letter to guide the transition to licensing for digital asset financial products.
The update clarifies ASIC’s approach to determining whether digital assets are financial products and sets expectations for providers preparing to comply with the new regime. Under the no-action position, until 30 June 2026, ASIC does not intend to take enforcement action against:
- a person for failing to hold an AFSL when providing financial services in relation to digital assets that are financial products; and
- a person for failing to hold an Australian market licence or clearing and settlement facility licence solely because one or more digital assets is a financial product.
This temporary relief applies in certain circumstances, including where on or before 30 June 2026, the person has lodged with ASIC an application for the relevant license (including an application to vary the conditions on an existing license), and allows providers to continue operating while they transition to the new licensing requirements.
AUSTRAC is to receive new powers
The Minister for Home Affairs has announced plans to introduce legislation amending the Anti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth). The proposed reforms would grant the Australian Transaction Reports and Analysis Centre (AUSTRAC)’s CEO new powers to restrict or prohibit, products, services and delivery channels identified as high-risk for money laundering and terrorism financing. This initiative reflects a greater regulatory push to address emerging threats such as the use of crypto ATMs to convert cash into digital assets that can be transferred instantly and with minimal traceability.
The specific details of the proposed powers are yet to be released. However, the changes signal a commitment to regulatory agility in tackling financial crime.
On 16 October 2025, AUSTRAC released detailed VASP guidance in preparation for the introduction of Australia’s enhanced Virtual Asset Service Provider (VASP) regime, which begins on 31 March 2026.
The guidance covers:
- Clarification of “virtual asset” and “VASP” definitions, replacing outdated “digital currency” terminology;
- In-depth detail on the designated services now regulated: e.g., exchanges (fiat and crypto), transfers, custody/safekeeping, and financial services linked to asset issuance;
- Practical examples of AML/CTF (Anti-Money Laundering/Counter-Terrorism Financing) obligations, including the “travel rule,” wallet due diligence, customer ID, and monitoring; and
- Implementation tools: a factsheet and enrolment guide, outlining when VASPs must register and what compliance is required.
The guidance applies immediately and supports entities in preparing for the new VASP obligations. Firms should review the guidance now and register with AUSTRAC via the online portal. Enrolment opens now and registration must be completed before launching designated services from 31 March 2026.
Next steps
With multiple reforms on the horizon (covering digital assets, payments modernization and AML/CTF obligations) businesses should start preparing now. This means:
- Mapping which changes apply to your products and services;
- Planning for licensing under new regimes; and
- Updating compliance frameworks to meet enhanced governance and disclosure requirements.
Early engagement with regulators and close monitoring of ASIC, AUSTRAC, and RBA guidance will be critical, as transitional relief (such as ASIC’s no-action position until 30 June 2026) offers only a short window. Boards and senior management should be briefed on timelines and strategic implications to ensure readiness for 2026 and beyond.
If you want to understand what the regulatory landscape means for your business and understand the upcoming changes in greater detail, please get in touch with our regulatory experts, Lucy Adamson and Tom Marshall.