ASIC releases new guidance on crypto investment products
ASIC has released new regulatory guidance for product issuers and market operators on how they can meet their regulatory obligations in relation to crypto-asset exchange traded products (ETPs) and other investment products.
ASIC’s guidance is set out in Information Sheet 225 Crypto-assets (INFO 225) and Information Sheet 230 Exchange traded products: Admission guidelines (INFO 230).
The information covers good practices for market operators in how they admit and supervise these products, and good practices for product issuers in how they establish and operate these products. Key matters covered by ASIC’s good-practice guide include admission and monitoring standards, custody of crypto-assets, pricing methodologies, disclosure and risk management.
Responsible entities that intend to hold underlying assets that comprise crypto-assets will need to hold an authorisation in relation to crypto-assets. ASIC has introduced a new ‘crypto-asset’ category in the licensing application for responsible entities. Details of this are set out in INFO 225, with updates to relevant forms and regulatory guides to be made in due course.
"Crypto-assets have unique characteristics and risks that must be considered by product issuers and market operators in meeting their existing regulatory obligations,” ASIC commissioner Cathie Armour said.
“The good practices we published provide practical examples of how these obligations may be met, in a way that maintains investor protections and Australia’s fair, orderly and transparent markets.”
The good practices and licensing changes follow ASIC’s public consultation in Consultation Paper 343 Crypto-assets as underlying assets for ETPs and other investment products (CP 343) in June 2021. In CP 343, ASIC consulted on proposals to establish good practices for these products within the existing regulatory regime and changes to our licencing regime.
ASIC received 32 non-confidential submissions in response to CP 343. Most of the submissions received were generally supportive of ASIC’s proposals in CP 343. Some submissions raised comments, questions or suggestions for ASIC to consider. ASIC’s consideration of these submissions is detailed in Report 705 Response to submissions on CP 343 Crypto-assets as underlying assets for ETPs and other investment products.
ASIC also notes the Senate Select Committee on Australia as a Technology and Financial Centre released its Final Report on 20 October 2021, with recommendations on developing an Australian regulatory framework for crypto-assets.
ASIC has made submissions to the Select Committee and will work with Treasury and Government as they consider the recommendations in the Final Report.
This comes as recent reports have revealed there has been increased demand from SMSF investors driving crypto investment in a rapidly maturing market.
29 October 2021
Tony Zhang
www.smsfadviser.com
