Australia publishes draft stablecoin and payments legislation

The Australian Government has released exposure draft legislation which will regulate stablecoins as a standalone financial product and make significant amendments to Australia's payments legislation. The proposed laws will apply financial services licensing obligations to stablecoin issuers and introduce bespoke reporting and compliance obligations carrying hefty civil and criminal penalties for non-compliance.

Assistant Treasurer and Minister for Financial Services, Daniel Mulino, stated in a press release on 9 October 2025 that the draft legislation delivers:

A core licensing regime that will set clearer obligations on payment service providers that perform specific functions.

A graduated regulatory framework for stored value facilities like prepaid accounts, stablecoin issuers, or wallets that hold customer funds.

Explanatory material released with the draft legislation states that the objective of the new laws is to create a more comprehensive and effective regulatory system for payment services which reflects the nature of modern payment products and services.

What do the changes look like?

The draft legislation introduces stablecoins to the regulatory framework by defining tokenised SVFs and tokenised SVF providers (curiously the term “payment stablecoin” has been dropped after previous consultations).

A tokenised SVF is defined as a stored value facility where:

1. Each right to redeem a particular amount in respect of the amount standing to the credit of the facility is exercisable only by the person who possesses the digital token attached to that right; and

   
   

2. The amount that may be redeemed in exercising that right is fixed and denominated in a single currency (whether Australian or foreign currency).

A tokenised stored value facility provider is defined as a person who:

1. Carries on a financial services business in this jurisdiction that consists wholly or partly of issuing tokenised stored value facilities; and

   
   

2. Is a constitutionally-covered corporation.

This definition would appear to include foreign stablecoin issuers depending upon whether they are caught by the broad definition of carrying on a business under financial services laws.

The draft legislation also introduces ongoing disclosure obligations for tokenised SVF providers, requiring them to publish online:

1. Any material change or significant event that may reasonably be expected to affect the value of the assets backing their tokens.

   
   

2. Any material change or significant event that may reasonably be expected to affect their ability to meet those obligations.

   
   

3. A monthly statement detailing their reserve assets and outstanding liabilities.

Under the draft legislation, offences carrying civil and criminal penalties of up to 5 years imprisonment will also be created, punishing SVF providers who:

1.    Fail to comply with their ongoing disclosure obligations; or

2.    Disclose misleading or deceptive information.

While the legislation would impose criminal penalties in the form of imprisonment, given only a constitutional corporation can act as a tokenised SVF provider, one would expect that the risk to directors of imprisonment for failing to meet monthly reserve reporting requirements is limited save perhaps in the most egregious circumstances.

Statutory defences will be available where the information required to be published was not disclosed because it could not be obtained or where reasonable steps were taken to ensure that the information would not be misleading or deceptive.

Further payment reforms

The draft exposure legislation contains a number of other significant changes to the way in which payments services are regulated in Australia. Importantly, those changes are expected to extend to providers dealing in money and tokenised SVFs only, whilst seeking to coexist alongside the digital asset reforms which are currently also the subject of consultation.

The reforms will see the abolishment of the concept of a non-cash payment facility and purchased payment facility, and its replacement by a number of more prescriptive payment products and services.

In totality, these changes broaden the scope of existing payments licensing obligations in a number of respects. They will, for example, provide for express coverage of pass through digital wallets and remittance.

We are told that a second draft exposure bill will be circulated early next year which will specify important exemptions to the regime including carve-outs for "purely back-end services" from technology and enablement services (presumably software developers). The two exposure draft bills are expected to be introduced to Parliament as a single legislative package.

Have your say

If you offer payment products (including hitherto unregulated services such as stablecoin issuance, remittance and digital wallet providers), the proposed reforms will affect you. The draft legislation is currently open for consultation and the Government has invited interested parties to make written submissions on the new laws before 6 November 2025.

The Government is aiming to implement the legislation in 2026. Consultations on subordinate legislation will follow.

Written by Steven Pettigrove, Luke Higgins and Nick Rae