Digital assets are here. Where are Australia’s banks?

The new digital asset framework gives financial institutions needed direction on how to compete in the next era of financial services.

In brief:

• Banks are yet to offer substantial digital asset-based financial services, but new regulations are opening the door for them to meet customer demand.
• Banks need to understand how and where they will compete in the fast-moving, high-growth digital asset market – and start building the capability to do so.
• Rather than waiting for finalised policy, banks can see the direction of legislation and learn from other markets and leading practices to decide on strategy.

Australia’s digital asset market is going mainstream. Already, financial services laws can apply to the issue of assets like stablecoins - and related activities - to trigger financial services licencing requirements. Issuers may (depending on their activities) also need to comply with APRA’s standards, including full asset backing and mandatory monthly reporting.

The Corporations Amendment (Digital Assets Framework) Bill 2025, passed in April 2026, defines digital asset platforms (DAP) and tokenised custody platforms (TCP) as financial products under the Corporations Act 2001. These changes to the legislation don’t directly regulate digital assets, like Bitcoin, but focus on the entities that hold or exchange them. Providers may also have to hold an AFSL and comply with strict custody, disclosure and other consumer protection standards.

In regulatory terms, Australia is late to the digital asset party. In other jurisdictions, particularly Asia-Pacific markets of Hong Kong, Singapore and Japan, large institutions, family offices and banks have already incorporated crypto into their portfolios.

Many international operators are now looking to enter the Australian market where they expect regulation to spike a new wave of products coming to market. Despite its lack of regulation to date, Australia is already a top-tier consumer market for crypto. According to the Independent Reserve Cryptocurrency Index 2025, 31% of Australians hold digital assets – one of the world’s highest adoption rates. The new regulation will only build consumer confidence in crypto products and services.

1. Don’t wait for granular rules

We can see enough signposting on where regulators will expect banks to land on custody, disclosures, consumer protection and operational resilience. There’s also a lot to learn from other markets about what “good” looks like – and how products and services will evolve.

In a landscape surrounded by international players poised for entry, local banks with a digital asset product strategy will have a real first-mover advantage. This is less about racing to launch and more about doing the work early to define where you will lead, where you will follow, and what niche you can credibly own.

Remember: offshore platforms already have mature products and operational playbooks. But local entities have the customer relationship.

It’s also vital to consider existing products and services for future regulatory impact. Existing operators will be required to assess their current operating model and assess the impact the DAP and TCP legislation will have on their regulatory stance. In some cases, this may lead to changes in what services are built in-house vs those shifted to specialist providers.

Regulators are not going to be prescriptive in telling the market when they do or don’t need to be licensed. They’ll expect financial services to assess scenarios, understand where a product crosses into the regulated perimeter, and work hand-in-hand with risk and compliance functions to design commercially viable and approval-ready offerings.

And customers want that too.

2. Stablecoins as the corporate beachhead

Stablecoins are used by 13% of financial institutions and corporates globally, with 54% of non-users expecting to adopt them in the next 6 to 12 months.¹  Business customers, who’ve already seen digital asset innovation in Singapore and Hong Kong, want their banks to help them use stablecoins to improve working capital. As treasury functions modernise, stablecoins are being evaluated, not as crypto exposure, but as a tool to compress settlement cycles and reduce the drag created by fragmented banking infrastructure.

Currently, the top use case is for cross-border payments – one of the most stubborn inefficiencies in global finance. Integrating quick-settling stablecoins into treasury workflows avoids the issues created by multiple intermediaries and opaque FX spreads. Equally, the ability to pay suppliers quickly, reduce reconciliation pain and receive collections in a digital-native format can improve both cash conversion and supplier relationships.

Across our global clients, go-to-market models for stablecoins include build-your-own, offering maximum control but requiring significant investment in capital, governance, cyber security and operational resilience. A faster route is white-labelling, accelerating time to market with the trade-off of shared fees and governance.

Some institutions are joining consortia, spreading cost and risk while building ecosystem credibility – although coordination and decision-making can be complex. Others are starting by distributing third-party stablecoins through existing channels – the simplest, lowest-risk entry point to meet demand.

3. Wallets are the new customer account

Digital assets behave like bearer instruments – custody is inherently high risk. But this is where banks have a clear trust advantage. EY research² shows 66% of digital asset managers are driven by regulatory compliance in custodian selection. In this context, regulated, institutional grade models typical of banks are set to prevail further over crypto-native providers. This is a marked shift from previous years’ survey research.

Wallets are the critical interface for the new era of financial services – and the next battleground for the customer relationship. Owners will control the flow of value, data and trust. So even if banks decide not to offer custody as a service, they will still require secure wallet hosting capabilities to efficiently account for customers’ increasingly digital-native portfolios of assets across fiat currencies, property, crypto, bonds and tokenised funds. This is also an important opportunity to strengthen stickiness and retention by offering customers a one-stop view of digital and traditional balances.

4. The world gets tokenised

Global financial markets are already tokenising versions of traditional assets – listed equities, private credit, commodities and real estate – allowing fractional ownership of traditionally illiquid assets. This is why major global institutions, including JP Morgan, BNY and Goldman Sachs, are investing heavily in tokenisation capabilities.

As financial services rails digitise and converge with agentic AI to bring new frontiers in automated trading and value exchange, there will be a race to bring assets on chain.

Now that tokenisation is unlocking new financial utility, banks will need systems that can securely store, trade and account for tokenised assets. Otherwise, they risk being bypassed as capital markets evolve.

5. Getting from pilot to profit

Australia’s financial institutions have not been asleep at the wheel. The industry is actively engaged in monitoring global trends and investing in pilots and trials to learn and shape product strategy. There’s a big gap between a proof-of-concept and a regulated financial product operating at scale.

We often see pilots stall due to misaligned risk appetite, fragmented ownership or banks underestimating the operational and financial-crime exposure that comes with bearer-style assets. Some banks also discover too late that digital asset propositions require deep integration into core functions: treasury, payments, settlement, reconciliations and regulatory compliance.

Many Australian banks will face the additional headwinds of legacy systems. Meanwhile, the vendor landscape remains fragmented, requiring coordination across issuers, wallet providers, payment networks, reserve custodians and multiple blockchain ecosystems.

6. What “bank-grade” stablecoin implementation looks like

Several providers already hold stablecoin-related licences in Australia, including Macropod, AUDC and Forte. To catch up, banks need to address multiple issues including:

• Prudential, capital and liquidity issues, including capital and balance sheet treatment, reserve design, segregation and reporting
• Cybersecurity, resilience and smart contract controls, to manage both traditional and on-chain risk
• End-to-end operational integration, spanning treasury, payments, settlement, reconciliations and reporting
• Vendor and ecosystem governance, across issuers, wallet providers, payment rails, reserve custodians and blockchain networks

Getting regulator-ready also requires a step-change in governance and risk management. Risk appetite must be defined by use case, counterparty and jurisdiction. Banks will also need on-chain controls that go beyond traditional transaction monitoring: blockchain analytics, full life cycle tracing across chains and platforms, monitoring beyond the bank’s perimeter, and custom scenarios aligned to stablecoin-specific threats.

For regulated offerings, providers will need to address ongoing regulatory obligations relating to cyber resilience arrangements.

This is not a one-off uplift. It requires deep assessment of partners’ AML and sanctions controls, and training frontline, operations and risk teams on emerging on-chain risks.

What to do next

Australian banks no longer need to wait for perfect regulatory clarity to move. The priorities now are to define your digital asset and stablecoin ambition – and start building capability. It’s time to uplift talent, infrastructure, risk, controls and compliance to be ready to compete in the new era of digital asset finance.