Regulatory
Our regulatory framework. Plainly stated.
TCP Classification Statement
Nexfolio's Tokenised Custody Platform issues digital tokens that represent financial products held in custody. These tokens are structured to satisfy the definition of a Financial Product Token under the Corporations Act 2001 — specifically as an Intermittent Token issued in compliance with the requirements of the Digital Assets (Market Regulation) Act 2025 as enacted in January 2025.
A Financial Product Token is a tokenised representation of an existing financial product. It is not a new financial product in itself. Each token is backed 1:1 by an equivalent financial product held in institutional custody, factual control is maintained by the token issuer, and the issuer acts as agent for the token holder in respect of the underlying asset. These are the three conditions of the Factual Control Carve-Out under the Act.
Key Provisions
s761GB — Factual Control / MPC
The token issuer maintains factual control of the underlying financial product through a multi-party computation (MPC) co-signing architecture. No single party can unilaterally control or transfer the underlying assets — but the issuer, acting as agent, can execute transfers consistent with client instructions and regulatory requirements. This design satisfies the factual control requirement without creating a single point of compromise.
s761GD — 1:1 Backing / Proof of Reserve
Each token in circulation is matched by one equivalent financial product held in institutional custody. The 1:1 ratio is maintained continuously and verified by an on-chain Proof of Reserve oracle — independently attested, not self-reported. The oracle compares live on-chain token supply against independently reported custody holdings and flags any discrepancy in real time.
s761GE — Agent Accountability / Audit Logs
The issuer acts as agent for the token holder in respect of the underlying financial product. Every instruction the issuer executes on behalf of a token holder — deposit, withdrawal, corporate action, transfer — is recorded as an immutable transaction on the blockchain and is available to the holder, their adviser, and a regulator at any time. Agent accountability is structural, not reliant on periodic reporting.
AFSL Status
AFSL application in preparation
Nexfolio Pty Ltd does not currently hold an Australian Financial Services Licence. An application is being prepared and is expected to be lodged in Q2 2026, with approval targeted for Q4 2026 subject to ASIC review timelines. Nexfolio will not offer financial services to retail clients until an AFSL is granted and all relevant obligations are in place. Engagement with institutional and professional investor partners during the development phase is conducted on a pre-commercial basis consistent with applicable exemptions.
Demonstration Requirements
The following table summarises the 13 key requirements that Nexfolio's TCP must satisfy for classification as a Financial Product Token under the Corporations Act, and the mechanism by which each is addressed.
| Requirement | Reference | Nexfolio Mechanism |
|---|---|---|
| 1:1 Asset Backing — Each token is backed 1:1 by an equivalent financial product held in custody. | s761GD | Proof of Reserve oracle — on-chain, automated, independent attestation |
| Factual Control — The token issuer has factual control of the underlying asset. | s761GB | MPC co-signing architecture; custody with established FMI provider |
| Agent Accountability — The token issuer acts as agent for the token holder in respect of the underlying asset. | s761GE | Immutable on-chain audit log of all instructions and transfers |
| Holder Identification — Each token holder is identified and KYC verified. | ERC-3643 / AML-CTF | On-chain compliance enforced at transfer level; non-verified wallet cannot receive token |
| Transfer Restriction — Token transfers are restricted to verified holders. | ERC-3643 | Implemented at smart contract level; not dependent on issuer instruction |
| Token Recovery — Lost or compromised wallets can be replaced without loss of underlying asset. | ERC-3643 / s761GB | Token cancellation and reissuance to new verified wallet; custody never affected |
| No Fractional Exposure — Tokens are not fractionalised or leveraged. | s761GD | 1:1 issuance enforced at contract level; minting requires custody confirmation |
| Segregation — Client assets are individually segregated. | Custody requirement | Each client holds tokens in their own on-chain account; no pooling |
| No Rehypothecation — Underlying assets are not lent, pledged, or rehypothecated. | s761GD | Policy enforced via custody agreement and on-chain verification |
| Continuous Verification — 1:1 backing is verifiable continuously, not just at reporting dates. | s761GD / ASIC guidance | Proof of Reserve oracle provides real-time on-chain verification |
| Regulatory Reporting — Required reports are submitted on time and accurately. | ASIC / AUSTRAC | Nine automated report types; see below |
| AFSL Authorisation — The issuer holds an AFSL authorising the relevant financial services. | s766A | Application in preparation; not yet lodged |
| AML/CTF Programme — A compliant programme is in place. | AUSTRAC | Implemented; AUSTRAC registration applied and pending |
ASIC Reporting
Nexfolio's infrastructure is designed to automate the generation and submission of the nine key report types required for regulatory compliance. Reports are generated directly from on-chain data — not from manual reconciliation — which eliminates the risk of reporting errors that arise from off-chain data aggregation.
- 01Proof of Reserve attestation — Daily on-chain verification of 1:1 asset backing
- 02Token issuance and redemption log — Every mint and burn recorded with timestamp and counterparty
- 03Transfer compliance report — Every transfer mapped to verified KYC status of sending and receiving wallet
- 04Token recovery events — Complete audit trail for every cancellation and reissuance event
- 05Custody reconciliation — Daily reconciliation of on-chain token supply against custody holdings
- 06Suspicious activity flags — Real-time alerts on anomalous transfer patterns
- 07AML/CTF transaction monitoring report — Monthly summary for AUSTRAC obligations
- 08DDO compliance report — Monthly NexFundAI dimension scores against TMD bands for applicable funds
- 09ASIC market integrity data — Trade and transaction data in required format
AUSTRAC
Nexfolio has applied for registration with AUSTRAC as a Digital Currency Exchange provider. This registration is pending. An AML/CTF programme is in place and operational, consistent with AUSTRAC obligations for digital currency service providers.