Digital Asset Licensing After 30 September 2026: Do You Need an AFSL Variation?

Introduction

Australian Securities and Investments Commission (ASIC)’s sector-wide no-action position for digital asset businesses passed on 30 September 2026. The position reflected ASIC’s enforcement discretion, rather than a legislative exemption, as explained in Regulatory Guide 108 (RG 108).

Existing Australian Financial Services Licence (AFSL) holders should therefore review whether their authorisations cover their digital asset products and services. This article explains when a licence variation may be required, the key steps involved, and how the current regime differs from the Corporations Amendment (Digital Assets Framework) Act 2026 (‘Digital Assets Framework Act‘), which commences on 9 April 2027.

Interactive Tool: Check If Your Digital Asset Business Needs an AFSL

Understanding ASIC’s 2026 Digital Asset Licensing Deadline

Who Can Rely on ASIC’s No-Action Position?

Eligible businesses providing financial services in Australia for digital assets that are financial products may rely on ASIC’s no-action position if they satisfy its conditions. The business must have provided the relevant financial service in Australia by 31 December 2025 and, by 30 September 2026, taken one of the following steps:

• Lodge an application for an AFSL under Section 913A of the Corporations Act, including an application to vary an existing licence under Section 914A;
• Become an authorised representative of an AFS licensee under Section 916A;
• Use an arrangement involving a related body corporate or an intermediary authorisation that meets the conditions in the no-action letter.

As a condition of the no-action position, a business providing services to retail clients must also become a member of the Australian Financial Complaints Authority (AFCA) before lodging its application.

Once licensed, AFCA membership is a statutory obligation under Sections 912A(1)(g) and 912A(2)(c) of the Corporations Act. In addition, under the terms of ASIC’s no-action letter, the position does not cover crypto lending or earn products, most non-cash payment facilities, or derivatives relating to digital assets other than wrapped tokens.

What Happens After 30 September 2026?

Section 911A(1) of the Corporations Act applies whether the no-action position applies or not. From 1 October 2026, a firm that requires an AFSL or variation but has not satisfied the position’s conditions no longer has the benefit of ASIC’s stated enforcement forbearance.

• Section 911A(1) is a civil penalty provision.
• For a body corporate, the maximum pecuniary penalty under Section 1317G(4) is the greatest of:
  • 50,000 penalty units;
  • three times the benefit derived and detriment avoided; or
  • 10% of annual turnover, capped at 2.5 million penalty units.
• Contravention is also an offence.

ASIC has stated that it will not take action against an eligible firm that lodged its AFSL application or variation application by 30 September 2026 while ASIC assesses the application, subject to the no-action position’s conditions. 

This does not authorise the conduct. Under RG 108, a no-action letter does not bind courts or third parties, and clients may still have rescission rights against an unlicensed provider under Section 925A of the Corporations Act.  The position continues until ASIC makes a final decision, such as granting, refusing or otherwise ending the application.

When Digital Asset Activities Require an AFSL for Your Australian Business

Is Digital Asset a Financial Product?

A digital asset is not automatically a financial product. Instead, the assessment depends on the rights, benefits, features and related arrangements attached to it, including how the asset is offered and used in practice.

Under Section 911A(1) of the Corporations Act, a person carrying on a financial services business in this jurisdiction must hold an AFSL covering the provision of those services, unless an exemption in Section 911A(2) applies. 

ASIC’s Information Sheet 225 (INFO 225), which is guidance rather than law, applies the statutory definitions in Division 3 of Part 7.1 of the Corporations Act, and identifies several possible financial product categories, including:  

• Managed investment scheme interests
• Securities, such as shares or debentures
• Derivatives
• Non-cash payment facilities
• Facilities for making a financial investment

A digital asset may fall within more than one category. In addition, an arrangement that combines a digital asset with other products or services may be assessed as a single arrangement under Section 761B and Section 762C of the Corporations Act. The classification may change if the asset’s rights, benefits, or features change.

What Financial Service Is the Business Providing?

The AFSL question also depends on what the business does in relation to the financial product, making advice from financial services lawyers for regulated digital asset businesses valuable.

Section 766A(1) of the Corporations Act defines the financial services relevant here, which INFO 225 identifies as core: 

• Advice
• Dealing
• Making a market
• Custodial or depository service

Dealing can include issuing, acquiring, disposing of, varying or arranging transactions involving a financial product. Financial product advice may arise where the business recommends an asset or expresses an opinion intended to influence a person’s decision. A business that regularly quotes prices at which it will buy or sell a financial product may be making a market.

Custody requires separate attention. Under Section 766E(1) of the Corporations Act, a custodial, or depository service involves holding a financial product, or a beneficial interest in one, on trust for or on behalf of a client under an arrangement. 

ASIC’s view in INFO 225 is that where a provider controls private keys connected with a public blockchain address and holds financial products or a beneficial interest for clients, the provider will likely be providing that service. However, a self-custody or self-hosted wallet arrangement is unlikely to involve that service where the client retains control of the private keys.

When Existing AFSL Holders Need a Licence Variation for Digital Assets

Are Your Existing Authorisations Broad Enough?

An existing AFSL does not automatically cover every digital asset activity, because Section 911A(1) of the Corporations Act requires the licence to cover the particular services provided. Authorisations are licence conditions, imposed and varied under Section 914A. It is therefore important to compare each proposed activity with the product, financial service and client authorisations already stated on the licence.

The comparison should cover whether the business will provide advice, deal in financial products, make a market, or provide a custodial or depository service. It should also confirm whether services will be provided to retail clients, wholesale clients, or both. Regulatory Guide 1 (RG 1) at RG 1.47 states that licensees should apply only for authorisations covering the financial services and products they intend to provide.

What New Authorisations May Be Required?

Any additional authorisations depend on the type of financial product, the financial services provided and the clients receiving those services. Under Regulatory Guide 1 at RG 1.45, authorisations affect:

• the financial services a business may provide;
• the products those services may relate to;
• the clients it may serve; and
• its obligations as a licensee.

Possible additions may include authorisations covering any of the financial services identified above—for example, financial product advice, dealing, market making or a custodial or depository service.

ASIC may consider a tailored authorisation where a digital asset product or arrangement is novel and does not fit an existing category, as described in RG 1 at RG 1.65(k).

What an AFSL Variation Application Involves for Financial Services Businesses

Responsible Managers & Organisational Competence

Under Section 912A(1)(e) of the Corporations Act, a financial services licensee must maintain the competence to provide the financial services covered by its licence. Section 912A(1)(e) does not refer to responsible managers. Under its guidance in Regulatory Guide 105 (RG 105), ASIC assesses this requirement by reviewing the knowledge and skills of the nominated responsible managers.

For digital asset businesses, ASIC expects responsible managers to demonstrate:

• relevant products and services experience;
• an understanding of the technology supporting those products; and
• knowledge of the regulatory requirements applying to an AFS licensee.

The number and experience of responsible managers will depend on the nature, scale, and complexity of the business.

Financial & Operational Requirements

An AFSL variation may affect the financial and operational requirements applying to a business. RG 1.208 identifies base-level financial requirements, surplus liquid funds requirements where the business holds client money or property, and adjusted surplus liquid funds requirements where it transacts with clients as principal.

A custodial or depository service may also attract additional financial requirements. ASIC states that custodians will typically require at least $10 million in net tangible assets, subject to the circumstances of the service.

Businesses providing financial services to retail clients must also maintain compensation arrangements, with professional indemnity insurance being the primary method under Section 912B of the Corporations Act and RG 1.239.

Why Digital Asset Businesses Cannot Wait for the New Digital Assets Framework

What changes on 9 April 2027?

The Digital Assets Framework Act commences on 9 April 2027 and introduces specific rules for digital asset platforms (DAPs) and tokenised custody platforms (TCPs). These platforms become financial products unless an applicable exception applies. The new regime also introduces requirements concerning:

• asset-holding standards;
• transactional and settlement standards;
• platform rules; and
• disclosure through a DAP/TCP Guide for retail clients.

ASIC has stated that it will issue further guidance and standards as part of the transition to the new regime.

Will Existing AFSL Authorisations Still Matter?

Existing AFSL authorisations will continue to matter after 9 April 2027. ASIC has stated that many existing authorisations will still be required, so the Digital Assets Framework Act does not remove the need to hold authorisations covering existing financial products and services.

The transitional provisions provide a six-month transition period for certain DAP/TCP financial services. A business that does not hold an authorisation covering the relevant service may apply for an AFSL or vary its existing licence during that period. Some businesses may therefore need further variations as the new regime begins.

Practical Steps for AFSL Holders

Classifying Digital Assets & Mapping Financial Services

Assess each digital asset together with its related arrangements, rather than relying on the asset’s label. Review the rights, benefits, features, terms, marketing materials and how customers use the product.

A digital asset or related arrangement may fall within more than one of the financial product categories discussed above. Next, map the services provided for each product, as identified above. Finally, reassess the classification if the asset’s rights, benefits, or features change.

Assessing Existing Authorisations & Lodging Your Variation Application

Compare the mapped products, services, and client types with the authorisations on your existing AFSL. Check whether the business provides services to retail clients, wholesale clients, or both, and whether responsible managers have the knowledge and skills required for the proposed activities under Section 912A(1)(e) of the Corporations Act.

If additional authorisations are needed, AFSL application and variation lawyers can help you apply to vary the licence through the ASIC Regulatory Portal and pay the application fee when lodging. As noted above, applicants should seek authorisations for the services and products they intend to provide, rather than adding authorisations speculatively. To rely on ASIC’s no-action position, an eligible business had to lodge its variation application on or before 30 September 2026.

Conclusion

Digital asset businesses do not all require an AFSL, but classification depends on the asset’s rights, features, related arrangements and the financial services provided. Existing AFSL holders should review their authorisations and, where required, lodge a variation application.

With that review in mind, contact Click Legal’s lawyers for AFSL applications and variations to assess your digital asset activities, existing authorisations and licensing options. Our Australian commercial and financial services lawyers can help identify whether a variation may be required and support your licensing position following the 30 September 2026 deadline, while keeping the existing regime separate from the Digital Assets Framework commencing on 9 April 2027.

Frequently Asked Questions