Stablecoin AFSL & APRA SVF Licence: Navigating Your Australian Transition

Introduction

The Australian digital asset ecosystem is entering a transformative era in 2026 as the government overhauls the regulation of payment service providers. For fiat-backed stablecoin issuers (distinct from decentralised DeFi protocols), this evolution requires navigating a dual-regulatory framework where oversight transitions from conduct-based supervision by the Australian Securities and Investments Commission (ASIC) to prudential regulation by the Australian Prudential Regulation Authority (APRA).

Scaling a tokenised digital asset platform from a startup to a major financial institution requires a clear understanding of the growth journey and the specific triggers for an Australian Financial Services Licence (AFSL). This guide provides essential information on the licensing framework for stablecoins under the Corporations Act 2001 (Cth), explaining how stablecoin issuers can successfully manage the shift to a bank-lite regime while maintaining robust consumer protection.

ASIC & APRA: The Dual Regulatory Framework

ASIC’s Role as the Conduct Regulator

In Australia, all stablecoin issuers begin their journey under the oversight of ASIC.

ASIC’s guidance, particularly INFO 225, clarifies that stablecoins pegged to a fiat currency are generally considered a type of financial product, specifically a non-cash payment facility.

Consequently, issuers will likely require an AFSL to operate legally.

ASIC’s role is primarily that of a conduct regulator. Its focus is on ensuring that financial services are provided efficiently, honestly, and fairly, which involves overseeing:

• Consumer protection and disclosure to ensure clients are not misled.
• Market conduct to maintain the integrity of the financial system.
• Organisational competence and arrangements for managing conflicts of interest.
• Dispute resolution processes for retail clients.

This conduct-based regulation applies to all stablecoin issuers operating with an AFSL, regardless of their size or the volume of assets they manage.

APRA’s Role as the Prudential Regulator

As a stablecoin project grows and becomes more significant to the financial system, APRA becomes involved.

This transition does not replace ASIC’s role but adds another layer of oversight, creating a dual-regulation regime.

Specifically, APRA’s involvement is triggered when a stablecoin issuer is classified as a Major Stored Value Facility (SVF).

APRA functions as the prudential regulator, focusing on the financial safety and stability of the entity and the broader system. Its primary concerns are:

• The protection of stored value held by customers.
• The solvency and financial soundness of the issuer.
• Ensuring the continuity of payment services, especially under stress.
• Managing systemic risk to prevent disruptions to the wider financial system.

The Threshold for APRA Oversight

The $200M Stored Value Limit Explained

The trigger for a stablecoin issuer to transition into APRA’s prudential regime is a specific monetary threshold. While earlier discussions often cited a $50 million limit, current legislative proposals have established a significantly higher trigger.

The proposed threshold for an entity to be classified as a “SVF” is approximately A$200 million in total stored value.

Once a stablecoin issuer’s operations reach this scale, it is no longer regulated solely by ASIC for market conduct. Instead, it becomes a dual-regulated entity, subject to:

• ASIC’s ongoing conduct oversight.
• APRA’s rigorous prudential supervision.

This shift is designed to ensure that as a digital asset facility grows in systemic importance, its financial stability and risk management practices are held to a higher, bank-like standard.

Calculating Stored Value for Your Digital Asset

To accurately track progress toward the APRA threshold, it is essential to understand how “stored value” is calculated.

The calculation is not based on company revenue or profit, but on the total liabilities owed to customers. For a stablecoin issuer, this is effectively the aggregate value of funds held in reserve to back the outstanding tokens.

The calculation is performed on a group-aggregated basis, meaning the stored value of all related corporate entities is combined. For instance, if a parent company operates several stablecoin projects, the total value held across all of them would be summed to determine if the threshold has been met.

The key components included in this calculation are:

• Customer balances held in digital wallets or payment accounts.
• The total outstanding supply of the stablecoin, measured at the face value of the fiat currency it is pegged to.
• Any funds that are awaiting settlement or redemption by users.

Key Prudential Shifts for an APRA SVF Licence

Increased Capital Adequacy Requirements

Transitioning from an AFSL to regulation by APRA introduces a significant change in capital reserve requirements. Under an AFSL, a stablecoin issuer typically meets relatively modest Net Tangible Asset (NTA) obligations.

These are primarily focused on ensuring the business can operate and wind down in an orderly manner. Furthermore, these requirements are generally scaled to a fraction of the business’s expenses or revenue.

Once an issuer becomes a SVF, APRA’s prudential standards apply, shifting the focus to a much higher level of financial resilience. The primary requirement is to hold Common Equity Tier 1 (CET1) capital, the highest quality of financial resource designed to absorb losses during periods of stress.

Under Prudential Standard APS 610, the minimum Prudential Capital Requirement for an SVF provider is set at 4% of the total outstanding stored value liabilities. For an issuer with $250 million in circulation, this would mandate holding $10 million of its equity, entirely separate from the assets backing the stablecoin.

Conduct-Based vs. Prudential-Based Reporting

The reporting obligations for a stablecoin issuer change dramatically when moving from ASIC to APRA oversight. ASIC’s framework is centred on conduct and disclosure, ensuring that consumers are treated fairly and are not misled.

As an AFSL holder, an issuer must:

• Report significant breaches.
• Provide a Product Disclosure Statement (PDS) to retail clients.
• Comply with the Design and Distribution Obligations (DDO).

In contrast, APRA’s reporting framework is prudential and statistical, focusing on the financial health and stability of the issuer. Once regulated by APRA, an issuer must submit extensive and frequent data returns, often through systems like Direct to APRA (D2A).

These submissions include:

• Monthly reports on financial position and the composition of reserve assets.
• Public monthly disclosures detailing the value of reserve assets against outstanding liabilities.
• Quarterly or monthly reports on capital adequacy, liquidity, and operational risk events.
• Annual risk management declarations from the Board and senior management.

CPS 230: The Operational Resilience Standard

A critical aspect of transitioning to APRA regulation is compliance with Prudential Standard CPS 230: Operational Risk Management, which became effective on 1 July 2025. This standard consolidates and elevates the requirements for managing operational risks, ensuring that an entity can withstand and recover from disruptions.

For a stablecoin issuer, this means guaranteeing that critical operations can be maintained within defined tolerance levels even during a crisis. Specifically, this includes the ability for a user to redeem their stablecoin for fiat currency.

CPS 230 mandates a robust framework covering several key areas:

• Operational Risk Management: Maintaining an active process for identifying, assessing, and managing operational risks and control failures.
• Business Continuity Planning: Developing and testing business continuity plans against severe but plausible scenarios, such as a major cyber-attack or the failure of a key service provider.
• Third-Party Risk Management: Actively managing the risks associated with all material service providers, including cloud infrastructure hosts, custodians, and even their subcontractors.

Moving to Bank-Grade Independent Audits

The transition to APRA oversight also marks a shift from standard corporate financial audits to more intensive prudential audits under Prudential Standard APS 310. While an AFSL holder is subject to an annual audit of its financial statements under the Corporations Act 2001 (Cth), an APRA-regulated SVF faces stricter scrutiny.

These entities must undergo an audit that provides independent advice to the regulator on the integrity of its risk control environment. Under APS 310, the appointed auditor has a dual responsibility to provide:

• Reasonable assurance that the prudential data submitted to APRA is reliable and correctly sourced from accounting records.
• Limited assurance that the issuer has implemented effective internal controls to ensure compliance with all applicable prudential requirements.

This creates a tripartite relationship where the auditor is required to communicate directly with APRA, effectively making them a key part of the regulatory supervision process.

Navigating Your Stablecoin’s Growth Journey

Phase 1: Startup & Scaling Stage

For any new stablecoin project, the initial regulatory journey begins under the supervision of ASIC. The primary goal during this startup phase is to apply for an AFSL.

This is necessary because stablecoins may be considered a type of financial product, specifically a non-cash payment facility. Consequently, this triggers the need for expert advice on compliance to relevant conduct and disclosure rules under the Corporations Act 2001 (Cth).

During this scaling stage, the focus is squarely on ASIC’s conduct-based requirements, which are designed to ensure consumer protection. Key obligations for a stablecoin issuer include:

• Providing a PDS for retail clients.
• Complying with DDO.
• Establishing arrangements for managing conflicts of interest.
• Implementing internal and external dispute resolution processes.

While navigating these ASIC requirements, it is crucial for founders to continuously monitor the growth of their digital asset platform, particularly the total stored value. Doing so allows them to anticipate the transition to the next regulatory phase.

Phase 2: Pre-Prudential & Transition Stage

As a stablecoin issuer approaches the A$200 million stored value threshold, it enters the pre-prudential and transition stage. This phase requires a strategic shift from focusing solely on ASIC’s conduct rules to proactively preparing for the rigorous prudential oversight of APRA.

Furthermore, the authorisation process for a SVF can take up to 18 months, making early engagement with APRA essential. Preparation for this transition involves several critical steps to build a prudential-ready structure.

Founders and CFOs should begin to:

• Engage with regulators by initiating formal discussions with APRA to understand the specific expectations and licensing process for becoming a SVF.
• Plan for capital adequacy to meet the significantly higher capital requirements under APRA, which mandate holding CET1 capital.
• Design operational resilience by mapping out an operational risk framework that aligns with the standards of Prudential Standard CPS 230, focusing on business continuity and third-party risk management.
• Develop recovery plans to demonstrate how the entity would manage financial stress in an orderly manner.

Conclusion

Navigating the Australian regulatory landscape for stablecoins involves a clear growth journey, beginning with an AFSL under ASIC and transitioning to a dual-regulated SVF under APRA. This shift, triggered by reaching approximately A$200 million in stored value, introduces significant prudential obligations, including higher capital requirements, bank-grade audits, and compliance with operational resilience standards like CPS 230.

Successfully managing this complex transition from a conduct-based to a prudential framework requires strategic planning and regulatory compliance expertise. To navigate your digital asset’s growth journey with confidence, contact our AFSL regulation lawyers at AFSL House today for specialised services tailored to turn these regulatory challenges into strategic opportunities.

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