ASIC INFO 225 on Financial Products & Services: Complete Guide for Digital Asset Businesses

Introduction

Businesses dealing with digital assets must determine whether their tokens or services fall within the financial product definitions under Section 763A of the Corporations Act 2001 (Cth) (‘Corporations Act‘). The Australian Securities and Investments Commission (ASIC) Information Sheet 225 (INFO 225) explains how these definitions apply to digital assets and when an Australian financial services licence is required.

This classification drives licensing, custody, risk management, and compliance obligations across a business’ operations. In this article, we explain the financial product categories in INFO 225, the licensing framework, and the steps businesses should take before ASIC’s no-action position expires on 30 September 2026.

Interactive Tool: Check If Your Digital Asset Is a Financial Product

Financial Products Under ASIC Information Sheet 225

Facilities for Making a Financial Investment

Under Sections 763A(1)(a) and 763B of the Corporations Act, a digital asset or related arrangement may be a facility through which a person makes a financial investment where the requirements in Section 763B are satisfied. This characterisation arises where:

• a client gives money or money’s worth to another person;
• the contribution is used or intended to generate a financial return or benefit; and
• the client lacks day-to-day control over its use.

INFO 225 explains that the return does not need to be paid as interest, dividends or cash distributions. It may arise through retained earnings, capital growth, buy-backs or other benefits linked to the success of the business or project. A token issued to fund an exchange, with holders expecting value to increase if the exchange succeeds, may fall within this category.

Interests in a Managed Investment Scheme

The definition of ‘managed investment scheme’ in Section 9 of the Corporations Act contains three principal elements, which INFO 225 applies to digital asset arrangements. An interest in a managed investment scheme is a financial product under Section 764A(1)(b). The arrangement is more likely to meet this description where:

• contributors provide money or money’s worth to acquire rights to benefits;
• contributions are pooled or used in a common enterprise to produce financial benefits or interests in property; and
• contributors do not have day-to-day control over the scheme’s operation.

Further, INFO 225 explains that an arrangement does not need to use a trust structure to satisfy the managed investment scheme definition. A token representing an interest in pooled funds used to acquire and manage an apartment building may be an interest in a managed investment scheme where investors expect benefits from rising property values or rental income.

Securities & Derivatives

A digital asset may be a security where the rights attached to it fall within the definition of a security in Section 92(5) of the Corporations Act, including rights resembling those attached to a share. A token giving an enforceable right to repayment of money lent to a company may be a debenture, within the definition in Section 9. Where a debenture is offered to retail investors, Chapter2L of the Corporations Act may impose further obligations.

Section 761D(1) of the Corporations Act defines a derivative by reference to future consideration whose amount or value is determined by, derived from or varies with something else. That underlying reference may include:

• another digital asset;
• a digital asset index;
• a commodity;
• real estate; or
• a financial product.

Wrapped tokens and contracts linked to a digital asset may therefore require assessment as derivatives.

Non-Cash Payment Facilities

Section 763D(1) of the Corporations Act covers facilities through which a person makes, or can make, payments to more than one person without physically delivering Australian or foreign notes or coins. INFO 225 states that this may include arrangements using:

• digital assets;
• loyalty points; or
• other forms of value.

As per INFO 225, custodial or non-custodial digital asset wallet may be a non-cash payment facility where users can transfer tokens to third parties, including users of another wallet service. Certain stablecoins may also fall within this category where they are designed, marketed and used as a payment method. The single-payee exemption in Section 763D(2)(a)(i) and the incidental financial product exclusion in Section 763E of the Corporations Act may affect the assessment.

AFSL Requirements & Financial Services for Digital Assets

Dealing & Providing Financial Product Advice

Under Section 911A(1) of the Corporations Act, a person carrying on a financial services business in Australia generally needs an Australian Financial Services (AFS) licence, so businesses should consider AFSL compliance services for digital asset businesses when assessing their licensing obligations.

A business may also be able to provide specified services as an authorised representative under Section 916A. In both these cases, licence must include authorisations covering the relevant financial products and services, unless an exemption applies.

Under the Sections 766C(1) and (2) of the Corporations Act, dealing includes:

• buying and selling a financial product;
• issuing, varying or disposing of it; and
• arranging for another person to deal in it.

Section 766C(3) generally excludes dealing on a person’s own behalf, subject to specified exceptions.

A business that acts as a broker for clients buying or selling digital assets that are financial products may therefore be providing a financial service. As per Section 766B(1), providing financial product advice can also require an AFS licence where a recommendation or opinion is intended to influence a consumer’s decision, including comparisons between digital assets or between a digital asset and a traditional financial product.

Custodial or Depository Services

Under Section 766E(1) of the Corporations Act, a digital asset service may involve a custodial or depository service where the provider holds a financial product, or a beneficial interest in it, on trust for or on behalf of a client.

INFO 225 states that controlling the private keys linked to a public blockchain address will likely indicate that the provider is offering a custodial or depository service. A self-custody or self-hosted wallet, where the provider does not control the client’s private keys, is unlikely to have that character.

Custody requirements are imposed through the Corporations Act and the ASIC Corporations (Custody Standards for Providers of Custodial and Depository Services) Instrument 2024/17 (‘ASIC Instrument 2024/17‘). Regulatory Guide (RG) 133 provides ASIC’s guidance on complying with these obligations. INFO 225 states that eligible digital asset custody arrangements may use omnibus holdings, but client assets must remain separate from firm assets.

Under the ASIC Corporations (Financial Requirements for Custodial or Depository Service Providers) Instrument 2023/648 (Cth) (‘ASIC Instrument 2023/648‘), a custodial or depository service provider typically requires at least $10 million in net tangible assets and 10% of average revenue. A lower requirement may apply where custody is incidental, including $150,000 where the relevant conditions are met.

Managing Conflicts of Interest & Client Money

AFS licensees must maintain adequate arrangements for managing conflicts of interest under Section 912A(1)(aa) of the Corporations Act. Digital asset businesses may face conflicts where related entities issue tokens, operate a trading platform, provide brokerage or custody, make markets, or trade on their own account.

As practical measures for managing these conflicts, ASIC identifies measures including:

• assigning responsibility for conflict management;
• avoiding preferential treatment of related-party assets; and
• separating business functions into different legal entities where appropriate.

Client money is governed by Division 2 of Part7.8 of the Corporations Act. Money covered by that regime must be held in a separate trust account with an Australian authorised deposit-taking institution, as mandated by Section 981B. Further, Section 981H treats that money as held on trust for the person entitled to it.

This requirement separates client funds from the firm’s own money and supports protection against misuse or loss. Where the provider cannot immediately distinguish money connected with financial products from other funds, relief may be considered case by case under ASIC’s relief process.

Digital Assets Framework Reforms & ASIC No-Action Position

The Corporations Amendment Act 2026

The Corporations Amendment (Digital Assets Framework) Act 2026 (Cth) (‘Corporations Amendment Act‘) passed Parliament on 1 April 2026 and received Royal Assent on 8 April 2026. It commences on 9 April 2027. It provides a six-month statutory transition period under future Section 1730 of the Corporations Act. This is separate from ASIC’s broader 18-month roadmap for implementing the new regime.

From that date, digital asset platforms and tokenised custody platforms will come within the financial services licensing regime. ASIC will license and supervise these platforms, with the new regime supported by standards covering matters such as:

• holding client assets;
• transactions and settlement; and
• financial requirements.

Extended No-Action Position for Digital Asset Businesses

ASIC has extended its conditional class no-action position for eligible digital asset businesses, with relevant steps generally required by 30 September 2026. The extended position covers:

• businesses applying for or varying an AFS licence;
• businesses operating under, or entering into, authorised representative arrangements or intermediary authorisation arrangements with an AFS licence holder; and
• firms seeking an Australian Market Licence or Clearing and Settlement facility licence, including the need to notify ASIC in writing of the intended application and hold a pre-meeting with ASIC.

Risk Management & AUSTRAC Registration for Digital Asset Exchanges

Implementing Adequate Risk Management Systems

AFS licensees must have adequate risk management systems under Section 912A(1)(h) of the Corporations Act. For entities dealing with digital assets, these systems need to address risks associated with the exchanges and service providers used to access or hold those assets, and INFO 225 identifies several risks as matters requiring attention, including:

• market risks;
• cyber risks; and
• custody risks.

The risk systems should also reflect the nature, scale and complexity of the business, including how digital assets are traded, stored and accessed.

AUSTRAC Registration & AML/CTF Compliance

As a good practice guidance, INFO 225 states that a responsible entity should conduct reasonable due diligence on each digital asset exchange it relies on. The responsible entity should be satisfied that the exchange:

• is a digital currency exchange provider registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC), where registration is required, or is regulated under foreign laws implementing Financial Action Task Force (FATF) recommendations on customer due diligence and record-keeping; and
• has risk-based AML/CTF systems and controls supervised or monitored by a body with legal authority to enforce those requirements.

These checks support the management of customer identification, record-keeping and criminal activity risks. Click Legal’s free AML/CTF Compliance Checklist can assist reporting entities when reviewing their AML/CTF controls.

Common ASIC INFO 225 Compliance Mistakes

Relying on Overseas Digital Asset Categories

A business may incorrectly assume that an overseas label, such as “utility token” or “exchange token”, has the same meaning in Australia. INFO 225 explains that international categories do not necessarily correspond with Australian financial product categories.

Instead, the business should assess the rights, benefits, features and practical use of each digital asset against Australian law. The Australian definitions of financial products and financial services may be broader than comparable concepts in other jurisdictions, including where the issuer or service provider operates from offshore.

Treating a No-Action Position as a Legal Exemption

Treating ASIC’s no-action position as though it changes the underlying law. As discussed above, the position is an enforcement approach, not a statutory exemption, and treating it as permission to operate without assessing licensing requirements can leave a business relying on an assumption the position does not support.

Failing to Update Disclosures for Digital Assets

Digital asset communications and disclosures can become inaccurate when the asset’s rights, benefits, features, or uses change. INFO 225 states that statements about fundraising must remain consistent with the terms and conditions, offering materials and other information given to consumers.

Misleading or deceptive conduct may be prohibited whether or not the digital asset is a financial product, although the applicable statutory provision depends on the conduct and product involved. The applicable prohibitions depend on the classification of the asset:

• for financial products and financial services, relevant prohibitions include Section 1041H of the Corporations Act and Section 12DA of the Australian Securities and Investments Commission Act 2001 (Cth); and
• where the Australian Consumer Law applies, Section 18 of Schedule 2 to the Competition and Consumer Act 2010 (Cth) prohibits misleading or deceptive conduct in trade or commerce.

Step-by-Step Guide to ASIC INFO 225 Compliance

Step 1: Assess Digital Assets Against Financial Product Definitions

Map each digital asset and related arrangement against the financial product definitions in the Corporations Act. Review the rights, benefits, features, marketing materials and practical use associated with each asset.

The assessment should consider whether the arrangement may involve:

• a facility for making a financial investment;
• an interest in a managed investment scheme;
• a security or derivative; or
• a non-cash payment facility.

As a practical compliance measure, record the reasons for each classification and reassess the position if the asset’s rights, benefits, or features change.

Step 2: Review Existing AFSL Authorisations

Compare each digital asset service with the authorisations on the business’s AFS licence. An AFS licence does not cover every financial product or service; its scope depends on the authorisations stated on the licence.

Check whether the business is dealing, issuing, advising, making a market or providing custody in relation to a financial product. If a proposed service falls outside the existing authorisations, assess whether a licence variation or an authorised representative arrangement is required before providing that service.

Step 3: Verify AUSTRAC Registration for Partner Exchanges

Conduct reasonable due diligence on each digital asset exchange used by the reporting entity, its authorised participants, market makers or other service providers. As discussed earlier, INFO 225 expects the exchange to be AUSTRAC-registered (where required) or regulated under equivalent foreign laws, and to maintain risk-based AML/CTF systems subject to supervisory oversight. Keep records supporting the exchange-selection decision and any later review.

Step 4: Update Risk Management & Custody Protocols

Review the entity’s risk management systems against the market, cyber and custody risks associated with its digital asset activities, as Section 912A(1)(h) requires for AFS licensees.

Assess custody arrangements against RG 133, confirming that client assets remain separated from firm assets and that the provider controls the relevant private keys. The review should also address how digital assets are traded, stored and accessed, with controls suited to the nature, scale, and complexity of the business.

Step 5: Prepare for the Digital Assets Framework Transition

Map the business’s activities against the transition to the new digital assets framework (commencing 9 April 2027), covering asset holding, transactions, settlement and financial requirements.

The extended ASIC no-action position expires on 30 September 2026. As discussed above, it is an enforcement position rather than a statutory exemption. Review licensing plans and applicable conditions before that date. Click Legal’s free AML/CTF Rules 2025 Guide – Tranche 2 & Existing Reporting Entities can assist with reviewing related AML/CTF compliance work.

Conclusion

INFO 225 shows that a digital asset’s classification depends on its rights, benefits, features, practical use and related arrangements, rather than its label alone. That classification can affect whether the asset is a financial product, whether an AFS licence is required, and which custody, risk management and disclosure obligations apply.

With that distinction in mind, review each asset, service, and licence authorisation before launching or changing an offering, and consider the 30 September 2026 expiry of ASIC’s extended no-action position. Contact Click Legal’s AML/CTF compliance lawyers for clear, practical assistance with assessing your digital asset operations and preparing for the applicable licensing requirements.

Frequently Asked Questions