Australia\u2019s financial regulator is using Project Acacia \u2013 a collaboration with the Reserve Bank and industry partners exploring tokenised wholesale markets \u2013 as a \u201cwindow into the future\u201d for fintech, while acknowledging that its regulatory sandbox is failing to convert most start-ups into fully licensed businesses.<\/p>\n
Speaking in Sydney on Thursday, Joe Longo said many firms reach the end of the sandbox testing period only to face a \u201ccliff\u201d, where they must either secure full regulatory approval or stop operating.<\/p>\n
The admission comes as the Australian Securities and Investments Commission reviews its Innovation Hub and broader regulatory sandbox regime, which since 2015 has helped about 1,000 fintech and regtech companies navigate Australia\u2019s financial rules.<\/p>\n
Longo said industry feedback highlighted the lack of an \u201cin-between\u201d step between testing and full licensing, prompting ASIC to explore new models that could better support start-ups as they move toward commercialisation and attract capital.<\/p>\n
The comments come as regulators push to ensure Australia remains competitive with global fintech hubs such as Singapore and the United Kingdom, which operate similar sandbox regimes but have developed clearer regulatory pathways for firms seeking to scale.<\/p>\n
\u201cAs APAC jurisdictions advance their respective regulatory frameworks across the areas of innovation, there is a danger this may create a patchwork of standards and siloed networks. This could open the door to the kind of \u2018regulatory arbitrage\u2019 ASIC has heard about, unfortunately more than once, in our consultations,\u201d he said.<\/p>\n
\u201cWithout collaboration across regulators and jurisdictions, fragmented regulatory standards will likely hold the region back as a whole.\u201d<\/p>\n
Longo said improving the transition from testing to licensing would help promising businesses grow, attract investment, and bring new financial products to market more quickly.<\/p>\n
ASIC is also emphasising the potential of tokenisation and digital asset markets to drive significant economic growth.<\/p>\n
The regulator pointed to research by the Digital Finance Cooperative Research Centre, which estimates that modernising Australia\u2019s financial infrastructure through technologies like tokenised assets could unlock up to $24 billion in economic opportunity.<\/p>\n
\u201c[The DFCRC] made it clear that this opportunity could only come about if Australia starts to modernise and strengthen its financial system infrastructure through technologies like tokenisation,\u201d Longo said.<\/p>\n
\u201cAnd only if the public and private sector work together. And only if regulatory and policy settings enable innovation. They\u2019re three big \u2018ifs\u2019. Because the current path only projects about $1 billion per year in economic gains by 2030. So, there\u2019s work ahead of us.\u201d<\/p>\n
He described tokenisation as a significant evolution in financial market infrastructure, \u201cbut we don\u2019t yet know how well it performs at scale against other models.\u201d He said there is an urgency in Australia to move beyond pilots and proof-of-concept trials to roll-outs at meaningful scale.<\/p>\n
\u201cThis said, ASIC has licensed FCX to trade and settle shares in private companies and units in managed investment schemes. This makes it one of the first licenced tokenised markets in the world.\u201d Adding, \u201cASIC has also granted licences to a number of firms to provide tokenised assets and stablecoins.\u201d<\/p>\n
Longo admitted that tokenisation at scale will require the cooperation and coordinated efforts of buy and sell side participants, market infrastructure and service providers, and policy-makers and regulators. \u201cThis is definitely a team sport,\u201d he said.<\/p>\n
\u201cThis is why ASIC has commissioned research on whether there are any regulatory and legal barriers to asset tokenisation, and what, if anything, we may need to do to facilitate further development.\u201d<\/p>\n
In February, the RBA said wholesale financial markets \u2013 especially those reliant on older infrastructure such as fixed income and private equity \u2013 present great potential for tokenisation.<\/p>\n
ASIC plans to convene industry roundtables and engage closely with public and private stakeholders to develop clearer regulatory pathways and foster ecosystem-level innovation.<\/p>\n
\u201cASIC also continues to work closely with the Treasury on how proposed digital asset and payment services law reforms might be implemented, so that businesses in these sectors can continue to innovate with confidence.\u201d<\/p>\n
The regulator is also looking at lessons from overseas, including models where start-ups are assigned dedicated case managers and exit strategies are planned well before the end of testing.<\/p>\n
\u201cWe\u2019ve also commissioned a scan of innovation in international financial markets to identify where ASIC might be more proactive in seizing opportunities around innovation,\u201d he said.<\/p>\n
While acknowledging the need for careful oversight, Longo stressed that ASIC wants to be a \u201cbacker, not a blocker\u201d of innovation.<\/p>\n
He highlighted Project Acacia as an example of how regulators can support experimentation while maintaining investor protections, and said the initiative provides a blueprint for how tokenised financial markets could evolve at scale.<\/p>\n
\u201cWe need fresh thinking, smart risk-taking, and collaboration across the private and public sector,\u201d he said, underscoring that Australia\u2019s ability to attract investment and compete globally hinges on how quickly regulators, investors, and innovators can work together to modernise the financial system.<\/p>\n
A report on the findings of Project Acacia is expected to be published around April.<\/p>\n","protected":false},"excerpt":{"rendered":"Australia\u2019s financial regulator is using Project Acacia \u2013 a collaboration with the Reserve Bank and industry partners exploring…\n","protected":false},"author":2,"featured_media":522104,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[5799,64,63,146343,44,260360,174643],"class_list":["post-522103","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-asic","tag-au","tag-australia","tag-digital-finance","tag-news","tag-project-acacia","tag-tokenisation"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/522103","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=522103"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/522103\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/522104"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=522103"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=522103"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=522103"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}