Stablecoin regulation in transition: a global and Australian perspective
- At Ante
- Neque Sodales
- Excepteur
Stablecoins have rapidly moved from a niche experiment into a core part of digital finance. By design, they aim to hold a stable value, often pegged to a fiat currency like the US dollar or Australian dollar. That stability makes them attractive for payments, cross-border remittances, and as a “cash leg” in crypto and tokenised markets.
For businesses, regulators, and consumers alike, stablecoins raise a critical question: how should they be regulated? Different jurisdictions are now answering this in very different ways — from strict licensing regimes to transitional relief. This divergence matters because stablecoins are increasingly being used in everyday payments, global remittances, and institutional settlement.
Global developments: different paths, common goals
Australia: transitional exemption for distributors
Australia has not yet legislated a permanent stablecoin framework, but regulators have taken a pragmatic step. In September 2025, ASIC registered the Corporations (Stablecoin Distribution Exemption) Instrument 2025/631, accompanied by an explanatory statement.
- Scope: Applies to distributors (but not issuers) of certain stablecoins — currently the AUD-pegged AUDM, issued by Catena Digital Pty Ltd.
- Relief granted: Distributors of AUDM do not need an AFSL, market licence, or CS facility licence when dealing with AUDM.
- Condition: Retail clients must be provided with the most current Product Disclosure Statement (PDS).
- Duration: The exemption runs until 1 June 2028.
This measure creates breathing space for innovation while Treasury finalises a comprehensive legislative regime. But it is explicitly temporary, underscoring that Australia must catch up with global peers by the late 2020s.
United Kingdom: payments-focused oversight
The UK is moving to fold stablecoins into its payments law. The Financial Conduct Authority (FCA) is consulting on rules for issuance, custody, and firm resilience, while the Bank of England (BoE) will oversee systemic stablecoin payment systems.
A key issue is whether to impose caps on retail holdings of systemic stablecoins — with consultation papers suggesting limits of £10,000 to £20,000. Industry has resisted, arguing that caps would stifle growth and adoption.
United States: Federal Law at last
In July 2025, the US enacted the GENIUS Act, establishing the first federal framework for payment stablecoins.
- Issuers must hold 1:1 fiat reserves.
- Regular audits and transparency are mandated.
- Issuers are subject to federal or state supervision.
The Act distinguishes stablecoins from securities and commodities, providing long-awaited clarity. It has already spurred plans for new compliant issuances from US-based providers.
European Union: MiCA in force
The EU’s Markets in Crypto-Assets Regulation (MiCA), effective since late 2024, is one of the most comprehensive frameworks globally.
- Distinguishes between e-money tokens (EMTs) and asset-referenced tokens (ARTs).
- Requires reserves, redemption rights, governance, and disclosure.
- Limits issuance of certain ARTs to avoid systemic risks.
As of 2025, regulators are considering how multi-issuance models (stablecoins issued in several jurisdictions) should be supervised.
Hong Kong: licensing underway
On 1 August 2025, Hong Kong’s stablecoin licensing regime took effect, supervised by the Hong Kong Monetary Authority (HKMA).
Issuers of stablecoins offered to the public — or pegged to the Hong Kong dollar — must be licensed. Requirements include reserve management, redemption rights, disclosures, and prudential supervision.
Mainland China: state-backed Digital Money
China has taken a very different approach. Private stablecoins remain banned, while the government promotes the digital yuan (e-CNY). Authorities view private stablecoins as a threat to monetary sovereignty, preferring a fully state-backed alternative.
Comparing approaches: Australia and its peers
| Jurisdiction | Current Status | Key Features |
| Australia | Temporary exemption until June 2028 | ASIC has granted relief for distributors of AUDM (an AUD-pegged stablecoin). Distributors do not need an AFSL or market licence, provided they give retail clients a PDS. Permanent legislation is expected, but not yet in place. |
| United Kingdom (UK) | Consultation phase | FCA and BoE proposals to regulate issuance, custody, and systemic oversight. Considering prudential requirements and possible caps on retail holdings. |
| United States (US) | Federal law passed (GENIUS Act, 2025) | Nationwide framework for “payment stablecoins.” Requires 1:1 fiat reserves, regular audits, and federal/state supervision. |
| European Union (EU) | MiCA now in effect | Comprehensive framework; issuers of e-money and asset-referenced tokens must hold reserves, guarantee redemption rights, and meet governance/disclosure obligations. |
| Hong Kong | Licensing regime live (Aug 2025) | Issuers must be licensed by the HKMA; rules cover reserves, redemption rights, disclosures, and prudential supervision. |
| Mainland China | Private stablecoins banned | Focus is on the state-backed digital yuan (e-CNY); private stablecoins seen as a threat to monetary sovereignty. |
Australia in context
Australia’s exemption is pragmatic but transitional. It provides short-term flexibility for innovation while avoiding disproportionate regulatory burdens on distributors.
However, by comparison:
- The EU and Hong Kong already have binding frameworks in place.
- The US has legislated at the federal level.
- The UK is in an advanced consultation stage.
This leaves Australia slightly behind the curve. By the time the exemption expires in 2028, Australia will need a comprehensive, permanent regime to keep pace with international standards.
What are stablecoins used for?
- Everyday payments: fast, 24/7 transfers.
- Cross-border remittances: cheaper and quicker than traditional rails.
- Trading and settlement: used as the “cash leg” on exchanges and OTC desks.
- Treasury management: fiat-pegged digital value held by businesses.
- DeFi and tokenisation: collateral and settlement in decentralised finance and tokenised asset markets.
“Stablecoins are no longer just another crypto experiment — they are becoming a mainstream financial tool.”
Conclusion
Different jurisdictions are taking different regulatory paths: the EU’s MiCA, the US GENIUS Act, Hong Kong’s licensing regime, and China’s digital yuan all mark decisive steps. By contrast, Australia’s stablecoin distribution exemption is a holding pattern: a temporary bridge until a full framework can be introduced.
The challenge for Australia will be to catch up by 2028, ensuring it remains competitive while safeguarding consumers and the financial system.