The Australian Securities and Investments Commission (ASIC), the country’s financial regulator and watchdog, is gearing up for the rapid growth of crypto-asset markets.
Speaking to CCN, an ASIC spokesperson indicated that the regulator has identified “significant increases” in cryptocurrency trade volume recently, prompting the regulator to prepare for further expansion in the markets.
The spokesperson also revealed that ASIC is actively “sharing information with domestic and international regulators” concerning the “taxation, anti-money laundering, payment systems, and financial activities” pertinent to crypto assets.
ASIC Updates Regulatory Guidance for ICOs
On May 30, ASIC updated the information on its website for businesses considering conducting or engaging with initial coin offerings (ICOs) and crypto-assets.
The spokesperson indicated that the guidelines have been positively received by the Australian cryptocurrency sector, stating:
“Companies and businesses that are seeking to legitimately operate and differentiate themselves from scam operators keen to capitalise on the back of the speculative hype around crypto assets have generally welcomed the updated guidance.”
The guidelines assert that entities seeking to conduct ICOs that distribute “financial products” will be subject to the capital fundraising provisions of the Corporations Act 2001, among other regulatory and licensing requirements. Financial products include securities, derivatives, managed investment schemes, and non-cash facilities.
ASIC mandates that both cryptocurrency issuers and intermediaries that deal with financial products must hold an Australian financial services (AFS) license. Exchanges and trading platforms dealing in financial products must hold an Australian market license, and may also be required to hold a Clearing and Settlement Facility License depending on the exchange’s settlement processes.
Australia’s Financial Watchdog Cracks Down on ‘Misleading’ ICOs & Crypto Funds https://t.co/T3mr8ZU76L
— CCN Markets (@CCNMarkets) September 20, 2018
Entities engaging in ICOs may also appeal to exemptions under the Corporations Act for the provision of financial products to “wholesale” or “sophisticated” investors exclusively
Australian Consumer Laws Apply to Overseas ICOs
ICOs deemed not to be issuing financial products are still required to provide accurate disclosures pertaining to their offerings, and will violate Australian consumer law should they be found to have misled investors, including via social media.
“As a minimum, regardless of whether a financial product is involved in the fundraising, the prohibitions against misleading or deceptive conduct under Australian Consumer Law apply.”
Australian laws also apply to ICOs that are promoted or sold to Australian investors from overseas, with the guidelines stating that “issuers of ICOs, crypto-assets and their advisers should not assume the use of these structures means that key consumer protections under Australian laws do not apply or can be ignored.”’
Crypto Exchanges Not Under Purview
The spokesperson also noted that Australian cryptocurrency trading platforms are not directly regulated by ASIC.
As such, the representative warned that consumer recourse is limited in the event that an exchange fails or is hacked, emphasizing that investors have lost “significant amounts of real money” in the past.
Last modified (UTC): September 13, 2019 8:56 AM