A leading Australian regulator is advocating for a functional, rather than technological, approach to crypto regulation. Rhys Bollen, Head of Fintech at the Australian Securities and Investments Commission (ASIC), argued that blockchain and crypto assets perform the same core economic functions as traditional finance and should be integrated into existing legal frameworks, not treated as a separate asset class.
Presenting his views at the Melbourne Money & Finance Conference, Bollen emphasized that regulation should be based on “economic substance rather than technological form.” This means a tokenized security would be governed by securities laws, a stablecoin by payment services legislation, and other crypto activities by consumer protection rules. This stance marks a deliberate departure from the bespoke, crypto-specific regimes being developed elsewhere, such as the European Union’s Markets in Crypto-Assets (MiCA) regulation and the proposed CLARITY Act in the United States.
Integrating, Not Isolating: Australia’s Amendment Strategy
Bollen explained that Australia is already implementing this philosophy. The centerpiece of the nation’s crypto legislative effort, the Digital Asset (Further Regulatory Reform) Bill 2023, does not create a new, standalone system. Instead, it proposes targeted amendments to the longstanding Corporations Act 2001.
“The Bill does not abandon the existing financial services framework,” Bollen said. “Instead, it introduces tailored amendments that integrate digital asset platforms into the established regulatory architecture.”
This integration is further clarified through ASIC’s regulatory guidance. Information Sheet 225, Regulatory guidance for crypto asset businesses, states that the existing legal definitions of “financial product” and “financial service” are technologically neutral and can apply to digital assets based on their function. ASIC explicitly rejects the concept of crypto as a discrete asset class for regulatory purposes.
“ASIC’s guidance confirms that a digital asset may fall within the regulatory perimeter where it functions as a security, derivative, managed investment scheme interest or non-cash payment facility,” Bollen noted. This focus on “economic characteristics rather than technological labels” aims to provide clearer rules for businesses and reduce “opportunities for regulatory arbitrage” where entities might seek the least regulated jurisdiction.
Prioritizing Intermediary Conduct to Protect Consumers
A key pillar of ASIC’s approach is regulating the service providers, not just the tokens themselves. Bollen pointed out that most consumer harm—from exchange failures to fraudulent lending schemes—stems from the conduct of crypto platforms offering custody, trading, or yield services.
“ASIC Information Sheet 225 is also focused on the regulation of intermediaries rather than tokens,” he said. By bringing platforms that hold client assets or provide financial services under existing obligations (like holding an Australian Financial Services Licence), the regulator can enforce standards for governance, conflict management, and dispute resolution that are familiar to the traditional financial sector.
The Decentralization Dilemma: A Practical Test
Bollen acknowledged that truly decentralized protocols present a classification challenge. However, he argued against accepting “formal claims of decentralization” at face value. The regulatory analysis, he said, should focus on practical reality.
“Where identifiable parties exercise influence over protocol design, governance, or economic outcomes, regulatory obligations can and should attach,” Bollen stated. This pragmatic test looks for de facto control, meaning developers, foundations, or large token holders could still attract regulatory responsibilities even if a project is marketed as decentralized.
Evolution, Not Revolution: A Historical Precedent
Bollen framed this approach as part of a historical pattern. Financial regulation has consistently adapted to technological change—from paper share certificates to electronic records—without discarding core principles like consumer protection, market integrity, and systemic stability.
“Digital assets largely represent new technological instances of longstanding financial activities,” he said. “While the mechanisms of issuance, transfer and record-keeping have changed, the underlying economic functions served by these instruments have not.”
By anchoring crypto regulation in these enduring economic functions—capital allocation, payments, and risk management—Australia’s strategy seeks to leverage proven regulatory models. The goal is to foster responsible innovation within a known perimeter, aiming for a balance that protects investors and markets without stifling the potential of distributed ledger technology.
This article is based on a presentation by Rhys Bollen, ASIC’s Head of Fintech, at the Melbourne Money & Finance Conference and references ASIC Information Sheet 225. The legislative details pertain to the Australian Parliament’s Digital Asset (Further Regulatory Reform) Bill 2023 and the Corporations Act 2001.
Cointelegraph’s Editorial Policy
