ASIC Releases Guidelines on ICO and Crypto Asset Licensing

The agency clarified the classification of digital assets as financial products.

The Australian Securities and Investment Commission (ASIC) on Thursday released guidelines to clarify the classification and legality of initial coin offerings (ICOs) and crypto assets.

The agency specified various regulatory signposts to be adopted by the crypto asset participants and answered questions like the things to be considered during the issuance of an ICO and the scenarios under which it will be considered as a financial product.

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The guidelines, however, only detailed the requirements a crypto business needs to follow under the country’s Corporations and ASIC Act, and did not cover Australian legislation administered by other regulators who oversee ICOs and crypto-assets including the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Taxation Office (ATO).

Licensing is mandatory

According to ASIC, if a crypto asset falls under the category of a financial product, the issuing company or any other third-party dealing with such products need to hold an Australian financial services (AFS) license. The miners, in that case, will be considered as a part of the clearing and settlement process.

ASIC defined financial products as “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.”

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Any exchange dealing in such products will have to comply with Australian financial market laws and will have to hold all the necessary licenses.

“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,” John Price, ASIC Commissioner, said.

“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.”

Classifying ICOs

The agency also detailed various details a company needs to follow while issuing an ICO and warned against any deceptive tactics followed by the promoters. It also urged the issuers to ensure whether they are in compliance with the Corporations Act, ASIC Act and the Australian Consumer Law, as well as anti-money laundering (AML) and know your client (KYC) obligations.

“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,” Price added

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