How the ASIC Stablecoin Distribution Exemption Provides Relief for Intermediaries

Introduction

The Australian Securities and Investments Commission (ASIC) has introduced a pivotal piece of temporary regulatory relief, the ASIC Corporations (Stablecoin Distribution Exemption) Instrument 2025/631 (Cth), to foster innovation within the digital asset sector. This instrument provides targeted class relief for intermediaries, exempting them from the requirement to hold separate Australian Financial Services (AFS), Australian market, or clearing and settlement facility licences when distributing certain eligible stablecoins.

This exemption acts as a crucial interim measure, creating a legal pathway for payment service providers and remittance firms to utilise stablecoins while broader government reforms for digital assets are finalised. This guide dissects the instrument, explaining its scope, the conditions for relief, and the strategic implications for intermediaries looking to operate in the Australian market without incurring the significant compliance burden of full licensing under the Corporations Act 2001 (Cth).

ASIC’s Rationale & Strategy for the Exemption

Bridging the Gap to the Digital Asset Bill

The ASIC Corporations (Stablecoin Distribution Exemption) Instrument 2025/631 (Cth) acts as a temporary regulatory bridge. It is a targeted, interim measure designed to allow market activity while the Australian government finalises a more comprehensive digital asset framework.

This instrument provides a legal pathway for intermediaries to operate without waiting for the full passage of the Treasury Laws Amendment (Regulating Digital Asset, and Tokenised Custody, Platforms) Bill 2025.

ASIC introduced this exemption because, under current law, many stablecoins are likely considered financial products. This would require intermediaries to hold multiple, costly licences. Therefore, the instrument serves as a pragmatic compromise by:

• Allowing stablecoin distribution under strict conditions
• Buying time for a permanent and comprehensive regime to be developed

This approach avoids stifling the market during the transitional period leading up to broader digital asset reform.

Fostering Innovation for Payment & Remittance Providers

A primary reason for this stablecoin distribution exemption is to support and facilitate responsible innovation within the digital assets and payments sectors.

Without this class relief, the significant cost and compliance burden associated with obtaining separate AFS, market, and clearing and settlement facility licences would make the distribution of stablecoins commercially unviable for many firms.

This regulatory relief allows payment service providers and remittance firms to:

• Test and implement stablecoin-based payment rails immediately
• Develop new products and services as the market evolves

By reducing the regulatory burden for these intermediaries, ASIC enables growth and experimentation in the rapidly developing digital assets space. At the same time, consumer protections remain in place at the issuer level.

Scope of the Exemption: Intermediaries & Issuers

Distinguishing Between Intermediaries & Issuers

The regulatory relief provided by ASIC Corporations (Stablecoin Distribution Exemption) Instrument 2025/631 (Cth) is specifically designed for intermediaries, rather than the entities that create and issue the stablecoins. This distinction is crucial for understanding who qualifies for the exemption, as the instrument provides a clear definition of eligible parties.

The exemption applies to a “Distributor,” which is defined as any person or entity apart from the Named Stablecoin Issuer. This category includes a wide range of businesses that facilitate the use of stablecoins, such as:

• Crypto exchanges
• Payment service providers
• Custodians and wallet providers
• Remittance firms

Conversely, the “Issuers” of the stablecoins are not covered by this relief. An issuer must hold a full AFS Licence that authorises it to issue the stablecoin.

The entire framework relies on the licensed issuer to meet all regulatory obligations, thereby ensuring the stability and integrity of the digital asset.

Identifying Named Stablecoins & Eligible Assets

The exemption’s scope is narrow and applies only to specific stablecoins that are explicitly listed within the instrument, referred to as “Named Stablecoins.” For a stablecoin to be included, its issuer must hold an AFS Licence, ensuring it meets ASIC’s regulatory standards.

Initially, the only stablecoin covered by the relief was:

Named Stablecoin	Issuer
AUDM	Catena Digital Pty Ltd
AUDF (Proposed)	Forte Securities Australia Pty Ltd

This structure allows the regulator to add more eligible stablecoins over time as other issuers become licensed.

It is important to note that widely used global stablecoins, such as USDC and USDT, are not currently covered by this exemption. They cannot be distributed under this relief unless their issuers obtain an AFS Licence and are officially added to the list of Named Stablecoins.

Permitted Activities for Intermediaries

Dealing in Stablecoins & Facilitating Payments

Under the ASIC Corporations (Stablecoin Distribution Exemption) Instrument 2025/631 (Cth), a distributor is exempt from holding an AFS Licence for dealing in a Named Stablecoin. This exemption allows payment service providers to:

• Buy, sell, transfer, and exchange the token to facilitate payments for their clients.
• Settle and clear stablecoin transactions, which is crucial for remittance firms using these digital assets for transfers.

The relief specifically covers the settlement and clearing of stablecoin transactions, making it easier for remittance firms to convert a customer’s funds into a Named Stablecoin and transfer it to a recipient. They can do this without needing a full AFS Licence or a clearing and settlement facility licence for that specific activity.

It is important to note that:

• This permission applies only to dealing in stablecoins.
• The exemption does not extend to issuing the stablecoin itself.

Providing Custodial & Depository Services

The instrument also permits distributors to provide custodial or depository services for a Named Stablecoin without a separate AFS Licence. As a result, intermediaries can:

• Hold stablecoins on behalf of their clients, effectively offering digital wallet or custody services.
• Manage client assets securely, which is essential for crypto exchanges and payment platforms.

By exempting these activities, ASIC enables a more seamless user experience. Clients can store their Named Stablecoins directly with the service provider, they use for transactions. This reduces both the complexity and cost that would otherwise be associated with obtaining and maintaining a separate licence for providing custodial services under the existing financial services framework.

Market Making & General Advice Provisions

The regulatory relief extends to making a market for a Named Stablecoin. This involves providing liquidity to ensure the token can be easily bought and sold, which is vital for maintaining a stable and efficient market for the digital asset. Intermediaries can engage in market-making without needing an Australian market licence, provided the activity relates solely to a Named Stablecoin.

Additionally, distributors are permitted to provide general advice, a form of financial product advice, in relation to a Named Stablecoin. This allows them to offer clients information about the product, but it is strictly limited to general recommendations and does not cover personal financial advice. The exemption ensures that payment service providers can support their clients with relevant information while operating within the defined scope of the relief instrument.

Critical Conditions: Reserves & Disclosure Requirements

Defining Reserve Assets & Backing Requirements

A fundamental condition for a stablecoin to be eligible under the ASIC Corporations (Stablecoin Distribution Exemption) Instrument 2025/631 (Cth) is that its issuer maintains reserves equal to or greater than the total value of the stablecoins on issue. This strict 1:1 backing serves as a critical operational constraint, ensuring both the stability and redeemability of the digital asset.

The definition of acceptable reserve assets is highly restrictive, as the framework prioritises high-quality and liquid assets to minimise risk. Under the instrument’s requirements, reserves are generally limited to:

• Cash on hand
• Demand deposits
• Funds deposited with an Australian Authorised Deposit-taking Institution (ADI) that are available for immediate withdrawal

This narrow definition effectively excludes riskier or less liquid assets, such as commercial paper or corporate bonds. For example, the reserves for the AUDM stablecoin consist solely of Australian dollar cash deposits held at a major Australian bank, ensuring each token is directly backed by an equivalent amount of fiat currency.

PDS Access & Disclosure Obligations

Intermediaries who rely on the stablecoin distribution exemption must comply with important disclosure obligations when dealing with retail clients. A key condition of the relief is that a distributor must take reasonable steps to provide or make available the most current Product Disclosure Statement (PDS) for the Named Stablecoin.

The PDS is the primary document for ensuring transparency and consumer protection. It provides essential information about the financial product, including:

• Its features
• Risks
• Redemption rights
• The composition of the underlying reserves that back the stablecoin

This requirement ensures that end-users can make informed decisions before transacting with the digital asset.

Proof of Reserves & Issuer Transparency

While the exemption focuses on distributors, the integrity of the entire framework relies on the transparency and compliance of the AFS-licensed issuer. The issuer is subject to ongoing AFSL audit and compliance obligations, which include verifying the reserves that back the stablecoin.

To ensure transparency, issuers are expected to provide regular, independent assurance of their reserve holdings. This is typically achieved through:

• Periodic reports from third-party auditors or assurance providers that reconcile the value of the reserves with the total number of stablecoins in circulation
• Publication of these reports on the issuer’s website, allowing market participants and regulators to verify the 1:1 backing and the quality of the reserve assets

This process of independent verification provides crucial confidence in the stablecoin’s stability, even though the reporting may be periodic rather than in real-time.

The Sunset Clause & Future Digital Asset Reforms

The Expiry Date of 1 June 2028

The ASIC Corporations (Stablecoin Distribution Exemption) Instrument 2025/631 (Cth) is explicitly a temporary measure designed to provide interim regulatory relief. The instrument includes a sunset clause, which means it is scheduled to be automatically repealed at the start of 1 June 2028.

This fixed expiry date marks the end of the transitional period for intermediaries distributing Named Stablecoins. After this date:

• The licensing exemptions granted under the instrument will no longer apply.
• Firms will be required to hold the necessary AFS, market, or clearing and settlement facility licences, unless a new regulatory framework is in place.

Transitioning to the Permanent Digital Asset Regime

The stablecoin distribution exemption was created to serve as a regulatory bridge, allowing the market to innovate while the Australian government finalises a comprehensive digital asset framework. The instrument is intended to align with the commencement of broader reforms, such as those proposed in the Treasury Laws Amendment (Regulating Digital Asset, and Tokenised Custody, Platforms) Bill 2025.

Firms relying on this temporary relief must:

• Prepare to transition their operations to comply with the permanent digital asset regime once it is enacted.
• Anticipate that this future framework is expected to establish a full licensing and regulatory system for digital asset platforms and payment service providers, replacing the interim measures provided by the exemption instrument.

Strategic Implications for Your Crypto Exchange or Fund

Limitations on Using Global Stablecoins like USDC & USDT

The regulatory relief provided by the ASIC Corporations (Stablecoin Distribution Exemption) Instrument 2025/631 (Cth) is narrow and applies only to specific stablecoins explicitly listed within the instrument, known as “Named Stablecoins.” As of now, this list is very short, initially including only AUDM, which is issued by Catena Digital Pty Ltd.

As a result:

• Widely traded global stablecoins, such as USDC and USDT, are not covered by this exemption.
• For an intermediary to distribute these tokens under the same relief, the issuers of these global stablecoins would need to:
  • Secure an AFS Licence, and
  • Be formally added by ASIC to the list of Named Stablecoins.

Consequently, payment service providers and remittance firms using USDC or USDT in Australia likely remain outside the scope of this relief and may still face full licensing requirements.

Evaluating the Risks of Reliance on Issuer Compliance

Intermediaries benefiting from the stablecoin distribution exemption must recognise that the entire framework’s integrity hinges on the compliance of the AFS-licensed issuer. The relief for distributors is granted on the condition that the issuer of the Named Stablecoin adheres to its own significant regulatory obligations, including:

• Maintaining adequate reserves
• Undergoing audits

The safety and stability of the digital asset depend heavily on the issuer’s diligence in meeting these requirements. For example, the instrument relies on the licensed issuer to maintain 1:1 backing of the stablecoin with high-quality liquid assets.

Any failure by the issuer to comply with these conditions poses a direct risk to:

• The intermediaries distributing the token, and
• The clients using it, as the asset’s value and redeemability are tied to the issuer’s operational and financial integrity.

Conclusion

The ASIC Corporations (Stablecoin Distribution Exemption) Instrument 2025/631 (Cth) offers a temporary but crucial pathway for intermediaries to distribute specific Australian stablecoins without needing separate financial services licences. This interim relief, however, is strictly conditional on issuer compliance with reserve and disclosure obligations and is designed to bridge the gap until a permanent digital asset regime is established before its expiry on 1 June 2028.

Navigating this complex and evolving regulatory landscape requires specialised guidance to ensure your operations remain compliant. To turn these regulatory challenges into strategic opportunities, contact our AFSL application lawyers at AFSL House today for trusted expertise and tailored AFSL compliance frameworks.

Frequently Asked Questions (FAQ)