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 comes in the context of anticipated reform to regulate stablecoins as stored value facilities as part of further payment licensing reforms and the release of draft legislation 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 regulatory relief for downstream trading of any approved stablecoin issued by a licensed entity.
• Further regulatory reform regarding payment stablecoins is on the horizon—likely to be subject to a specific stored-value facility framework as part of the broader payments licensing reforms.

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 three forms:

• draft updates to INFO 225, providing ASIC guidance on the application of existing financial product categories to various digital assets (including stablecoins);
• flagged future expansion of stored-value facility regulation to the issuance of payment stablecoins through the payments licensing reforms; 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) intended 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.

ASIC's current guidance for stablecoins

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 of each of these likely operating as financial products.

In December 2024, ASIC released Consultation Paper 381 (CP 381) proposing significant amendments to INFO 225, including several worked examples. It contains guidance on the ASIC's interpretation of existing laws, and its preliminary view that stablecoins are likely financial products (specifically, a non-cash payment facility).However, this update has not been implemented, and the CP 381 explicitly acknowledges that ASIC's application of the existing law 'may be materially different to how the Government's proposed payment services licensing … may potentially apply to stablecoins …'.

Applications of payments licensing reform to stablecoins

Concurrent to CP 381, Treasury’s December 2023 Strategic Plan for the Payments System and related licensing consultation paper also proposed a new licensing framework that would extend to payment stablecoins, aiming to bring issuers of 'payment stablecoins' under a dedicated payments licensing regime for stored value facilities (SVF).⁵

In this context, a payment stablecoin is a digital asset of token issued with the intent of maintaining a stable value relative to a fiat currency, and is capable of being redeemed for a fiat currency from the issuer.

These reforms are expected to complement ASIC’s financial product guidance, creating a dual-track regime: one for investment-like stablecoins, and another for payment-focused tokens. Regulation of entities that provide custodial services regarding any payment stablecoin would be subject to regulation under the draft Digital Asset Platform Bill.

This reform sits as part of the broader payments licensing reform being undertaken by Treasury. In September 2025, Parliament passed the first part of this broader reform agenda, with the Treasury Laws Amendment (Payments System Modernisation) Bill. The Government has also indicated its ongoing support for the regulation of stablecoins through the SVF regime, in its March 2025 Statement on Developing an Innovative Australian Digital Asset Industry.⁶

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 to hold separate Australian Financial Services (AFS), market or clearing and settlement facility licences—on the condition that the stablecoin issuer itself is AFS-licensed.

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.⁷ 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.⁸ 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.