A different kind of change
Digital assets are commonly described as a new type of investment product. That framing captures part of the picture but misses the more significant development. What distributed ledger technology, the underlying system on which digital assets operate, actually represents is a new layer of market infrastructure: a way of recording ownership, executing transfers and settling transactions through a shared ledger, rather than through chains of intermediaries, separate registries and manual reconciliation processes.
The practical difference is substantial. Under the current system, a share transaction, a bond settlement or a cross-border payment typically passes through multiple institutions before it completes. Each step takes time, carries cost and creates the possibility of error or delay. A shared ledger collapses many of those steps into a single record that all relevant parties can access and verify.
The legal character of a digital asset does not depend on the technology behind it. In Australia, whether a digital asset falls within the regulated financial services framework is determined by what rights it confers and what services it involves. The Australian Securities and Investments Commission has been consistent on this point: a token does not sit outside the law simply because it is recorded on a blockchain. Existing laws apply. What changes is how the legal obligations attached to those laws are met in practice.
The technology does not remove the need for trust. It changes where and how that trust is constructed.
Where the real transformation is occurring
Public attention has focused on retail adoption. Research indicates that approximately one in three Australians have held a digital asset at some point, with participation driven largely by investment interest rather than practical use.
The more consequential transformation is happening in wholesale markets, where the volumes, the institutional participants and the regulatory stakes are largest. Research led by the Digital Finance CRC published in March 2026 identifies three areas of structural change:
- market infrastructure, covering how securities are issued, traded and settled;
- payments, covering domestic and cross-border money flows; and
- the functionality of assets themselves, including how they can be divided, transferred and programmed to respond automatically to specified conditions.
That research estimates that digital finance innovation could deliver up to approximately A$24 billion per annum in productivity and cost benefits to the Australian economy. The figure is a modelled estimate, not a forecast, and it depends on adoption rates, regulatory development and infrastructure investment. It is, however, consistent with analysis from the IMF and others who have identified tokenisation, the process of representing existing assets as digital tokens on a shared ledger, as a structural response to inefficiencies that have existed in financial markets for decades.
The mechanism is direct. When settlement can occur in near real time rather than two business days, counterparty risk falls. When cash and collateral can be moved dynamically rather than held in reserve against slow-moving settlement cycles, capital is freed. When reconciliation between multiple record-keeping systems is replaced by a single shared ledger, operational costs fall. These are the gains that institutional participants are working toward.
What the benefits look like in practice
The benefits of digital asset infrastructure are real but they are not automatic, and they are not uniform. They are most evident in wholesale and institutional contexts where the legal framework is clear, the participants are sophisticated and the operational environment is disciplined. Retail applications have shown more variability and, in some cases, have highlighted governance and disclosure weaknesses that the technology itself neither created nor can resolve.
In practical terms, the areas where institutions are seeing or pursuing meaningful gains are:
Faster settlement: moving from a two-business-day settlement cycle toward near-real-time completion in certain environments, with corresponding reductions in the risk that a counterparty fails between trade and settlement.
More flexible use of collateral: the ability to move and re-use assets held as security more dynamically across transactions and platforms, rather than having them locked in place against slow settlement cycles.
Lower operational costs: replacing manual reconciliation between multiple institutions with a shared record that all parties can access, reducing the duplication and error that comes with parallel record-keeping.
Programmable transactions: the ability to embed conditions directly into a transaction so that it completes automatically when those conditions are met, such as releasing payment on delivery, or triggering a corporate action on a specified date.
Improved transparency: a shared ledger can give all authorised participants a consistent view of ownership and transaction history, subject to how the system is designed and who has access to what.
These benefits require deliberate design to realise. Tokenisation is not a technical layer that can be placed on top of existing market structures without changing them. It alters how securities are issued, how transfers are recorded, how settlement is finalised and how collateral is managed. The legal questions that arise, including who owns what, when a transaction becomes final and how disputes are resolved, are not secondary to the technical ones. They need to be resolved at the design stage.
The range of applications
Digital asset architecture is being applied across a wide range of financial products and markets. The legal implications vary considerably depending on the product and the jurisdiction involved.
In financial markets, the focus is on tokenised deposits, bonds and other debt instruments issued and settled on digital infrastructure, fund units in managed investment vehicles, interests in private companies and private equity, derivatives and structured products where certain processes can be automated, and real assets such as property or infrastructure held through a tokenised fund rather than direct title.
Beyond financial services, the same technology is being applied in supply chains to record the provenance and movement of goods, in environmental markets to track the issuance and retirement of carbon credits, and in identity and credentialing to create more portable and verifiable records that can support compliance processes such as customer verification.
Across all of these applications, a consistent legal principle applies: tokenisation does not dissolve existing obligations. Transfer restrictions, licensing requirements, disclosure rules and investor protections remain in force. In some cases, moving an asset onto a digital ledger introduces additional legal complexity, particularly where the ease of transfer on the ledger conflicts with restrictions that exist in underlying legal agreements. That complexity needs to be identified and addressed before a structure goes live, not after it encounters a problem.
Stablecoins: a specific regulatory challenge
Stablecoins sit at the intersection of payments, market infrastructure and financial regulation in a way that requires separate consideration.
A stablecoin is a digital token designed to hold a stable value, typically by being backed by fiat currency such as Australian dollars, high-quality assets or a combination of both. The practical appeal is that it can function as a settlement currency in digital markets without exposing the holder to the price volatility that characterises most digital assets.
The regulatory analysis is more complex than the concept. Whether a particular stablecoin constitutes a stored value facility, a deposit-like product or a financial product under the Corporations Act depends on how it is structured: how the backing assets are held, what redemption rights exist, how the reserves are managed and what governance applies. Each of these variables determines which regulatory framework applies and what obligations follow.
Asset segregation, reserve management, the enforceability of redemption rights and disclosure standards are not secondary considerations. They are the variables that determine whether a stablecoin arrangement is viable and whether it is defensible under regulatory scrutiny. The failures that have attracted enforcement action globally have not generally been failures of technology. They have been failures of legal structure and governance.
Stablecoins are increasingly being considered as settlement assets in tokenised wholesale markets, which raises further questions around how they interact with central bank money and how regulatory oversight is allocated between payments and financial services frameworks. These questions are active and unresolved in Australia.
Australia's regulatory position
Australia has moved from watching how other jurisdictions approach digital assets to actively designing its own framework.
The Corporations Amendment (Digital Assets Framework) Bill 2025 proposes to bring digital asset platforms and digital custody businesses within the existing financial services licensing regime, rather than creating a separate regulatory category for them. The policy choice is significant: it means that the obligations familiar to financial services participants, around custody, conduct, disclosure and compliance, apply to digital asset businesses as well. ASIC has confirmed through its regulatory guidance that many digital assets are already covered by existing law.
In parallel, the Reserve Bank of Australia is leading Project Acacia with involvement from ASIC, APRA and Treasury. The project is testing how tokenised assets and new forms of digital money could support settlement in wholesale markets. These are practical, structured trials rather than theoretical exercises. Their purpose is to understand how the legal, operational and technological elements of a reformed settlement system would interact.
A degree of tension in the policy environment is worth acknowledging. The research that identifies the potential A$24 billion productivity gain also notes that Australia is unlikely to capture much of it without more coordinated settings across the multiple regulatory regimes and institutions involved. That is not a criticism of the regulatory approach. It reflects the genuine difficulty of aligning market participants, infrastructure providers and regulators within a short timeframe. The organisations that engage actively with the reform process are better placed to influence its direction than those that wait for the framework to settle before acting.
The international context
The direction internationally is broadly consistent, even where the specific approaches differ.
Singapore's Project Guardian has tested tokenised funds, deposits and cross-border payments in a structured environment involving major financial institutions. Hong Kong's Project Ensemble has progressed to pilot use cases involving tokenised deposits and settlement. European and UK regulators have established regulatory sandboxes for digital securities and market infrastructure. In each case, the common elements are institutional participation, controlled conditions and a focus on establishing legal clarity before scale.
Large financial institutions are investing in the capability to move collateral across platforms using tokenised assets, to issue securities digitally and to manage treasury functions through programmable arrangements. Asset managers are exploring tokenised fund structures, though the practical constraints around how interests are transferred and valued have not always been resolved in early implementations. Custodians and exchanges are building infrastructure that integrates traditional custody with digital asset controls.
The legal framing is consistent across jurisdictions. Tokenisation is not a new category of law requiring new legal principles. It is a change in how existing obligations are met and how existing rights are expressed and enforced.
The legal challenges that require attention
Five challenges arise consistently across markets and product types. Each is a legal and governance question as much as a technical or commercial one.
What this means for institutions
AI is helpful in getting through these questions, but no AI can replace the creativity and judgment required for this level of complex legal design in a novel area. AI is backward-looking, and those who lead in in this fluid space need to be forward looking.
1. Digital assets are no longer at the margins
They engage the core of financial services law: licensing, custody, disclosure, market conduct and operational resilience. Organisations that have deferred engagement are increasingly visible in their inaction.
2. Infrastructure decisions carry long-term consequences
3. Legal design determines viability
The alignment between how a digital asset arrangement is structured and the legal rights it creates determines whether it works. How ownership is characterised, how custody is arranged, how insolvency is addressed and how regulatory obligations are met need to be resolved before a structure is deployed.
The decision that matters now
The markets that will lead in digital assets are not simply those whose governments permit the technology. They are the ones where institutions, regulators and legal advisers have done the work of translating trust, legal certainty and regulatory discipline into infrastructure that can operate at scale.
Australia has real advantages in that contest: a credible regulatory environment, deep capital markets and a public sector that is actively engaged in designing the infrastructure rather than observing from a distance. Those advantages are available to the institutions that engage with the legal and structural questions now. They do not accrue automatically, and they are not indefinitely available.
Digital assets are no longer an innovation story. For institutions that operate in financial markets, they are a question of legal positioning and strategic decision-making.
Thomsons advises Australia's largest digital asset exchanges, stablecoin issuers and traditional financial institutions on licensing, product design, compliance, regulatory engagement and contentious matters. The firm works closely with policymakers and regulators across all aspects of the digital assets reform programme.