Some stablecoins are more equal than others: ASIC issues stablecoin relief

Following industry consultation in late 2025, ASIC released a new regulatory instrument providing tailored licensing relief for certain stablecoins and wrapped tokens.  

ASIC Corporations (Stablecoin and Wrapped Token Relief) Instrument 2025/867 (Relief Instrument) provides licensing and disclosure exemptions to distributors of eligible stablecoins and eligible wrapped tokens.

‘Eligible stablecoins’ must the satisfy the following core criteria, among others:

• the stablecoin is issued by an eligible stablecoin issuer (typically, a stablecoin issuer who holds an AFSL licence, or an exempt foreign issuer);

• there are redemption rights associated with the stablecoin (i.e., it can be unconditionally redeemed for the underlying currency);

• the stablecoin issuer must maintain cash or cash equivalent reserves that are equal or greater than the total underlying amount of stablecoins on issue; and

• the stablecoins have no right to, or receive a financial return, other than redemption rights.

Additional criteria apply to ‘eligible wrapped tokens’.

The instrument offers licensing relief to distributors who are not issuers of stablecoins or wrapped tokens:

• who operate a financial market only because one or more stablecoins or wrapped tokens is a financial product;

• who operate a clearing and settlement facility only because one or more stablecoins or wrapped tokens is a financial product; and

• who provide certain financial services in relation to a stablecoin or a wrapped token.

  
  

While designed to foster ‘innovation and growth’, the practical limitations of the Stablecoin Instrument become apparent quickly. At the time of writing, there are only three Australian eligible stablecoin issuers which distributors can offer without fear of falling afoul of financial services licensing requirements.

The inclusion of exempt foreign issuers widens the breadth of the Relief Instrument, which contemplates foreign entities that are not required to hold an AFSL to issue the relevant digital asset because they do not carry on a financial services business in Australian (in relation to the digital asset).

Paragraph 12 of the Relief Instrument introduces additional conditions for the licensing exemption. Put simply, the distributors will be exempt from requiring licensing if:

1. the eligible stablecoin issuer has (within the last 4 months), published a report on its website about the composition and value of the reserves in relation to the relevant stablecoins at a date that is no more than 1 month before the date the report was published;

2. if the eligible stablecoins have been on issue for at least 16 months – the issuer has, within the last 13 months, published on its website a report:

   1. about the composition and value of the reserves in relation to the eligible stablecoins in the class at a date that is no more than 3 months before the date the report is published; and

   2. the report audited by a registered company auditor or equivalent;

3. the reports identify that:

   1. the reserves comprise only cash or cash equivalent assets denominated in the underlying currency; and

   2. the value of the reserves is greater than the amount of stablecoins on issue.

      
      

In addition, the issuer must hold reserves on trust.

Taking these requirements into consideration, a stablecoin issuer like Tether, and their native token USDT, may fall out of scope as their reserves comprise of (as at the last report published), cash and cash equivalents (77.23%), corporate bonds (0.01%), precious metals (7.13%), bitcoin (5.44%), ‘other investments’ (2.14%) and secured loans (8.06%). Tether has the largest market capitalisation of any stablecoin globally.

While the Relief Instrument signals ASIC’s intent to create a more permissive regulatory perimeter for digital asset infrastructure, its tightly drawn eligibility criteria will provide relief only to a limited range of stablecoins. By effectively limiting relief to fully cash-backed, stablecoins with rigorous, continuous and audited reserve disclosures, the framework prioritizes prudential considerations.

The relief also introduces an unusual situation where a distributor becomes reliant on the underlying stablecoin issuer to continue providing continuous disclosure of the composition and value of the reserves in relation to the relevant stablecoins. A scenario may arise whereby a distributor may fall out of the exemption criteria solely due to the failings of the underling issuer (i.e., where the issuer fails to provide updated reports, or introduces non-cash reserves).

In addition, while the eligibility criteria appear to have been drafted within certain tokens in mind, it will be up to distributors to apply the criteria and assess formal or substantive compliance.

Whether this instrument serves as a catalyst for a regulated domestic stablecoin ecosystem remains to be seen. With the likes of Tether taking steps to offer an onshore USDT in partnership with Anchorage in the United States, it will be interesting to see whether the relief instrument encourages more onshore operators in Australia.

Written by Steven Pettigrove and Will Deeb