The paper looks at the merits of introducing a retail CBDC, focusing on the extent to which consumers would value having access to a digital form of money that is safer and potentially more private than commercial bank deposits. 

The proposed framework would require digital asset platforms that hold over a certain threshold of Australians assets ($1,500 for an individual; $5 million in aggregate) to obtain an Australian Financial Services Licence.

Digital asset platforms would need to meet all general licence obligations, consistent with other licence holders.

According to the factsheet published together with the proposal paper, the general obligations are drawn from the Australian financial services law and include:

• providing the financial service efficiently, honestly, and fairly
• managing conflicts of interest
• having a dispute resolution system
• meeting solvency and cash reserve requirements
• keeping and submitting financial records
• producing product disclosure statements
• monitoring for and disrupting market misconduct.

All digital asset platforms will also need to meet specific obligations that take into account the nature of the platforms, of tokens, and their risks. The specific obligations, unique to the digital assets industry, will include:

• standard form platform contracts
• minimum standards for holding tokens
• standards for custody software
• standards when transacting in tokens.

The proposal would also apply additional obligations to four specific activities involving non-financial products offered by digital asset platforms:

• Trading – the exchange of digital asset platform entitlements between account holders.
• Staking – the participation in validating transactions on a public network.
• Tokenisation – the creation and exchange of entitlements backed by tangible and intangible assets.
• Fundraising – the sale of entitlements to fund the development of products and services.

Obligations are "targeted to address some of the risks that arise from digital asset platform business models and the nature of the tokens they provide access to." 

Deadline for comments is 1 December 2023.

The Committee welcomed the opportunity to "consider stakeholders’ views on the regulation of digital assets in Australia" but found that the Bill was "at odds with the measured and industry accepted approach" that the Australian Government was currently pursuing.

The report calls for issuers to:  

• address their over-reliance on client questionnaires as a primary distribution filter; 
• review their mass marketing of OTC derivatives; and  
• make greater use of available data to assist the design of derivative products, target market determinations (TMDs) and distribution arrangements. 

The report provides a global point-in-time view on the evolving retail trading environment, and outlines a suite of measures for regulators to consider involving:

• supervisory and enforcement issues emerging from cross-border offerings, and the need to enhance cooperation frameworks
• conduct and fraud implications emerging from recent cryptoasset trading trends
• increased greenwashing risk and the need to better identify compliance with climate disclosure standards
• impact of social media and finfluencer activity on retail decisions and behaviour, and the need to heighten regulators’ digital presence and strategies
• the escalation in unlicensed activity and the surge in self-directed online trading.

This analysis will inform ASIC’s strategic priorities on retail investor harms concerning cryptoassets, sustainable finance, scams and Australia’s design and distribution obligation laws.

A report on the project is expected to be published around the middle of the year.