Regulation of PSPs - Tranche 1 Exposure Draft Legislation

The Australian Government moves a step closer to reforming the licensing and regulation of Payment Services Providers (PSPs).

On 12 March 2026, Australian Treasury released for consultation the full package of Tranche 1 exposure draft legislation - including updates to earlier Tranche 1a draft legislation and additional policy elements - to reform the licensing and regulation of Payment Service Providers (PSPs).

Key Proposals

In totality, the Tranche 1 1(a) and 1(b) draft legislation introduces a new regulatory framework for payment service providers, including:

• defined regulated payment functions (e.g. stored value facilities, including tokenised SVFs/stablecoins, payment initiation and facilitation services);

• updated AFS licensing obligations tailored to PSPs;

• safeguarding requirements for payment-related funds;

• a new prudential framework, including APRA oversight of major SVF providers;

• a framework for unclaimed monies;

• powers to introduce a mandatory revised ePayments Code; and

• updated exemptions to clarify the regulatory perimeter

Next Steps

The deadline for comments on the exposure drafts is 9 April 2026.

To access the access the full Tranche 1 Exposure Draft legislation, click here.

Note: This article is of a general nature and not intended to address the objectives, financial situation or needs of any particular individual or entity. It is provided for information purposes only and does not constitute professional or legal advice.

Should you have any questions regarding this article, or the proposed Tranche 1 reforms, please get in touch with the Gen Advisory team.

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