Fintech Market Overview

This article does not constitute legal advice.

Smart contracts in Australia

Fintech Software

While there are currently no specific regulations dealing with blockchain technology in Australia, ASIC has published guidance outlining its approach to the regulatory issues that may arise through the implementation of blockchain technology and distributed ledger technology (DLT) solutions in fintech businesses more generally. ASIC reaffirms their 'technology neutral' stance in applying the financial services regime, including the position that businesses operating market infrastructure or providing financial or consumer credit services using DLT will still be subject to the compliance requirements that currently exist under the applicable regulation. As noted in Sections I and IV.i, Australia is currently experiencing a regulatory shift that may see various blockchain arrangements (e.g., DAOs) brought within the scope of regulation.1

Self-executing contracts or 'smart contracts' are permitted in Australia under the Electronic Transactions Act 1999 (Cth) (the ETA) and the equivalent Australian state and territory legislation. The ETA provides a legal framework to enable electronic commerce to operate in the same way as paper-based transactions. Under the ETA, self-executing transactions are permitted in Australia, provided they meet all traditional elements of a legal contract: intention to create legally binding obligations, offer and acceptance, certainty and consideration.1

Any attempt at an analysis of correction mechanisms, such as arbitration and mediation, in regard to this type of contract is challenging because there is little case law on smart contracts in Australia. Self-executing contracts may alter traditional dispute resolution in Australia based on the possibility of self-executing dispute resolution through online dispute resolution platforms.1

Fully automated investments are permitted in Australia on the condition that the automated service provider holds (or is able to rely on) an AFSL with the requisite managed discretionary account (MDA) authorisation. Automated services providers and their retail clients are required to enter into individual MDA contracts to engage in this process. An MDA contract allows trades to be completed on a client's behalf and includes the ability to automatically adjust the asset allocation of a client's portfolio, without prior reference to the client for each individual transaction. Automated investment service providers must also comply with certain conduct and disclosure obligations applicable to providing the automated financial product service.1

Client identification in Australia

Fintech in Australia

Fintech in other countries

  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/australia
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