Australia’s Securities Watchdog Updates Guidance On Crypto And ICOsbr>
The Australian Securities and Investments Commission (ASIC) has updated its guidance on initial coin offerings (ICO) and crypto-assets.
In a press release, the ASIC said that it has revised its Information Sheet 225 (INFO 225) Initial coin offerings and crypto-assets. First published in September 2017, INFO 225 indicates that ICOs and crypto-assets will often be financial products or involve financial products that are regulated under the Corporations Act. It provides information on how the Corporations Act may apply to businesses that are considering raising funds through an ICO and to businesses involved with cryptocurrencies.
According to the guidance, companies, including ICO issuers, intermediaries, miners and transaction processors, exchange and trading platforms, payment and merchant service providers, and custody service providers, that deal with crypto-assets that fall within the definition of a ‘financial product’ are required to hold an Australian financial services license.
Regarding ICOs, the ASIC noted that entities and their advisers need to consider all the rights and features of the ICO – regardless of how it is named and marketed – in determining whether the crypto-asset is a financial product or involves a financial product.
“Our experience suggests that ICOs by their nature seek to raise capital from the public to fund a particular project through the issue of crypto-assets such as tokens,” the regulator said. “If the crypto-asset issued by the ICO is a financial product (such as an interest in a managed investment scheme or a security), the issuer will need to consider the relevant capital raising provisions of the Corporations Act, AFS licensing requirements and other regulatory requirements. These regulatory requirements are in place to maintain the integrity of Australia’s financial market and ensure consumer protection.”
ASIC Commissioner John Price said that businesses offering crypto-assets, or offering services in relation to crypto-assets, need to undertake appropriate inquiries to satisfy themselves they are complying with all relevant Australian laws.
“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,” Price said. “Australian laws will also apply even if the ICO or crypto-asset is promoted or sold to Australians from offshore. 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.”