The rise of stablecoins—Australian regulatory developments and their global context

ASIC grants class order exemption with regulatory framework for stablecoins on the horizon 10 min read

Major progress is being made in modernising Australia's digital asset regulatory framework. ASIC Corporations (Stablecoin Distribution Exemption) Instrument 2025/631 grants class relief for intermediaries distributing stablecoins issued by licensed entities.

This move coincides with Treasury's payments licensing Tranche 1a Exposure Draft legislation proposing to regulate stablecoins within a tokenised stored value facility framework, as part of broader reforms to the regulation of payment services. The proposed payments licensing reforms are being consulted on in parallel to proposed licensing reforms to extend the financial services regulatory framework to custody-based digital asset platforms and tokenisation activities. 

In this Insight, we examine the rise of stablecoins, their current regulatory status and parallel developments on the international stage. (For coverage of the draft reforms regarding digital asset and tokenisation currency activity more broadly, see our companion Insight here) .

Key takeaways

• Stablecoins are rapidly increasing in significance in global finance, driven by major US institutional investment and growth, following the passage of the Guiding and Establishing National Innovation for US Stablecoins Act (the GENIUS Act).
• Stablecoins are often likely to be considered financial products. The ASIC class order provides interim regulatory relief for downstream trading of any approved stablecoin issued by a licensed entity.
• Further regulatory reform is on the horizon, with Treasury's Tranche 1a Exposure Draft legislation (see our Insight) proposing to regulate stablecoins within a tokenised stored value facility framework. 

What are 'stablecoins'?

Stablecoins are a class of digital assets designed to maintain a stable value—typically by pegging to traditional fiat currencies (such as the US dollar), commodities (such as gold), or other financial instruments. Unlike volatile cryptocurrencies, such as Bitcoin or Ethereum, stablecoins aim to function as reliable mediums of exchange, stores of value, and units of account.

They typically fall into three structural categories:

• fiat-backed: backed by reserves of fiat currency held in bank accounts or short-term government securities—eg USDC and USDT;
• crypto-collateralised: backed by other digital assets (eg ETH or BTC), often over-collateralised to absorb volatility; and
• algorithmic: use supply-and-demand mechanisms and governance tokens to maintain price stability without external collateral. These models are more experimental/novel, and have seen significant failures—the most notable being the Terra/Luna collapse in May 2022, which wiped out over US$40 billion in market value within a few days.

Each structure presents different trade-offs, in terms of decentralisation, transparency, volatility and regulatory risk.

2025: the year stablecoins went mainstream?

Some commentators have flagged that 2025 is an inflection point for stablecoins, as a combination of improved regulatory clarity in key jurisdictions, as well as technology improvements, experimentation by major institutions and growing practical demand, have accelerated growth.

Total market capitalisation of stablecoins has doubled in the past 18 months, to a reported $250 billion, which facilitates on-chain payment transactions of between $20 to $30 billion per day. While this represents less than 1% of global daily money transfer volume, the current growth trajectory continuing would see total payments exceed legacy payments volumes in less than a decade.¹

Governments and financial institutions across the globe are also actively investigating central bank-backed digital currencies and alternative stablecoin solutions, as part of efforts to refine monetary policy and advance the modernisation of financial infrastructures.

Global and GENIUS regulation fuelling institutional adoption

There has been substantial progress in the regulation of stablecoins in internation markets, including:

• In the EU, the Markets in Crypto-Assets Regulation (EU) 2023/1114 is now fully in force, and contains a framework governing the issuance of asset-referencing tokens (alongside broader regulation of the crypto-asset market).
• Hong Kong's Stablecoins Ordinance became effective from August 2025, and applies to all fiat-referenced stablecoins, including those pegged to HKD, USD and EUR. Initially, only a small number of licences will be issued to test the framework, with major banks such as HSBC and ICBC among early applicants.
• In Singapore, the Stablecoin Regulatory Framework, administered by the Monetary Authority of Singapore, builds on the existing Payment Services Act 2019, though applies narrowly to domestically issued fiat-pegged tokens.

Importantly, there has also been major regulatory movement in the US, with the GENIUS Act signed into law on 18 July 2025. Marking the first major federal legislation governing stablecoins there, it establishes clear regulatory guardrails for 'payment' stablecoin issuers. Key provisions include:

• Issuer eligibility and compliance: only insured depository institutions, such as banks, credit unions and approved non-bank financial entities, can issue stablecoins, and issuers must adhere to the Bank Secrecy Act 1970, and implement robust anti-money laundering and counterterrorism financing protocols, effectively providing bank-grade compliance for issuance.
• Reserve requirements: issuers must maintain 1:1 reserves in low-risk assets such as US Treasuries, physical currency, or approved equivalents, aiming to eliminate liquidity risks from issuers.

The Trump administration has made digital assets a legislative priority in its second term, with the GENIUS Act part of a wider push to ease regulatory barriers and encourage domestic development of blockchain-based financial infrastructure.

These developments have catalysed major US banks—JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup—into expanding stablecoin initiatives.² JPMorgan processes over $1 billion daily through JPM Coin, and is launching JPMD, a deposit token, on Coinbase’s Base blockchain.³ Top banks are also forming a consortium to create a USD-backed token for B2B settlements and cross-border payments,⁴ and other major banks are now positioning themselves as trusted issuers in a market once dominated by crypto-native firms.

Australia's regulatory landscape

Australia's move to clarify its regulatory framework sits in the context of this growing global market and rise in US institutional issuance. Regulatory clarity is coming in two main forms:

• Treasury's draft payments licensing reforms providing for stored value facilities associated with payment stablecoins (but not necessarily the digital tokens themselves) to be regulated as financial products; and
• a new class order for stablecoin intermediaries.

This comes alongside:

• the release of Treasury Laws Amendment (Regulating Digital Asset, and Tokenised Custody, Platforms) Bill 2025 Exposure Draft (the draft Digital Asset Platform Bill) proposing to introduce a comprehensive regime for digital asset platforms and tokenised custody platforms. This is not intended to capture payment 'stablecoins'; and
• experimentation from various institutions on the potential of digital assets in payments. This includes the join activities of the Reserve Bank of Australia; the Digital Finance Cooperative Research Centre; and various institutional participants in Project Acacia, which involves a number of pilot and proof of concept use cases, with both central-bank issued digital currencies and privately issued stablecoins.

These follow a number of stalled reform efforts in recent years, including proposed changes to INFO 225, and Consultation Paper 381, that sought to capture how stablecoins are regulated within Australian financial services laws.

Tranche 1a Exposure Draft legislation: regulation of payment service providers

On 9 October 2025, Treasury released Tranche 1a Exposure Draft legislation (the Exposure Draft) as part of a two-phase overhaul of existing payments architecture and the introduction of a new payments regulatory framework. The Exposure Draft proposes to amend the Corporations Act 2001 (Cth) to introduce new definitions and regulatory requirements for various payment services, including those involving digital assets and stablecoins (though the proposed reforms are technology neutral and so do not apply specifically to digital assets).

The Exposure Draft defines the following concepts that are relevant to stablecoins and their issuers:

• Stored Value Facility: a facility where funds are transferred to a person, and another person acquires rights to redeem those funds, including via non-cash transfers;
• Tokenised Stored Value Facility: a stored value facility where redemption rights are linked to digital tokens, and the amount redeemable is fixed and denominated in a single currency (eg AUD). This is the category most stablecoins will fall under; and
• Tokenised Stored Value Facility Provider: a person (usually a corporation) issuing tokenised stored value facilities as part of a financial services business. The digital token itself is not regulated as a financial product – rather, the underlying facility and the provider are regulated.

The Tranche 1a reforms are largely consistent with the expected outcomes identified in Treasury's previous consultations and guidance, alongside international best practice. Tranche 1a addresses only the licensing requirements and some key obligations under the Australian Financial Services (AFS) Licence regime. Proposed licensing exemptions, money safeguarding obligations, Australian Prudential Regulation Authority powers, unclaimed money rules and a new ePayments Code-mandating power will be the subject of Tranche 1b, expected to be released for consultation in early 2026.

Treasury's approach largely mirrors stablecoin regulation frameworks in the EU, Hong Kong and Singapore, which regulate stablecoins and payment services based on activity and risk. Transitional arrangements, and some exclusions and exemptions, are not fully detailed in the draft, but we expect these to be outlined in future consultation rounds.

Regulation of entities that provide custodial services regarding any payment stablecoin would be further subject to regulation under the draft Digital Asset Platform Bill.

Consultation on the Exposure Draft closes 6 November 2025.

Australia's current guidance for stablecoins

The Exposure Draft and proposed licensing framework have been in development for several years. ASIC’s current INFO 225 provides guidance on how Australian financial services law applies to crypto-assets—including cryptocurrencies, tokens, stablecoins and initial coin offerings, with an understanding that each of these likely operates as a financial product.

In December 2024, ASIC released Consultation Paper 381 (CP 381) proposing significant amendments to INFO 225, including several worked examples. It contains guidance on ASIC's interpretation of existing laws, and its preliminary view that stablecoins are likely to be financial products (specifically, a non-cash payment facility).

New ASIC Class Order eases entry for stablecoin intermediaries

The most recent update to the stablecoin regulatory framework is through ASIC's introduction, on 18 September 2025, of a new class exemption through ASIC Corporations (Stablecoin Distribution Exemption) Instrument 2025/631. This targeted class exemption removes the need for intermediaries distributing Australian-issued stablecoins named in the instrument to hold separate AFS, market, or clearing and settlement facility licences—on the condition that the stablecoin issuer itself is AFS licensed. This may be interpreted as an interim measure in light of the Tranche 1a Exposure Draft, to provide an avenue for stablecoin issuers to readily issue them until a formal regulatory framework is established.

Australia’s first official licence was issued immediately following the class order, to Macropod (Catena Digital), with its stablecoin product 'AUDM' listed in the class order.⁵ ASIC has also proposed amendments to the class order, seeking to add a second stablecoin, 'AUDF', issued by Forte Securities Australia Pty Ltd—alongside several small changes, to further streamline future additions as and when they arise.⁶ Both existing licensed stablecoin issuers have been licensed as a non-cash payment facility (consistent with INFO 225).

The effect of the class order is to provide further flexibility and clarity to downstream intermediaries for the issued stablecoins where they are issued by a licensed entity. Intermediaries benefiting from the relief must make the issuer's product disclosure statement available to their clients, but are otherwise exempt from licensing requirements.

Where to now?

The suit of reforms through the digital asset industry seeks to align Australia’s approach with global best practice, by balancing innovation with consumer protection, and positioning it as a credible jurisdiction for digital asset activity and investment. This is particularly important to the development of a local digital asset ecosystem, and for adoption and innovation by local players, as global interest and activity in the space continues to grow, particularly though the US.

Australian institutional and digital asset industry participants who are investigating implementing stablecoins into their payments and settlement ecosystem should continue to monitor the rapidly changing landscape and the upcoming payments licensing reform, and the impact of an increased global demand for these products.

Actions you can take now

Please reach out to any of the people below if you would like to discuss the issues raised in this Insight, or stablecoins and digital currency questions more generally.