ASIC stops misleading ICOs and crypto-asset funds targeted at retail investors

Marco Green
September 22, 2018

"The Fund was proposing to invest in a range of cryptocurrency assets", ASIC said, adding that Investors Exchange Limited swiftly consented to the stop order.

The Australian Securities and Investments Commission (ASIC) is getting serious about its financial scam ban, announcing that it has stopped several proposed initial coin offerings (ICOs) or token-generation events that targeted retail investors.

ASIC was granted new powers in April to take action against prospective ICOs under consumer law where there is evidence of misleading or deceptive conduct.

In the United States, the Securities and Exchange Commission (SEC) has become actively involved in regulating the cryptocurrency market to safeguard investors. "It is the legal substance of your offer - not what it is called - that matters", said ASIC Commissioner John Price.

He said promoters should not simply assume that using an ICO structure allows them to ignore key protections or the investing public and that disclosures about the offer needs to be complete and accurate.

In April 2018, the ASIC prevented ICOs from raising funds if they failed to comply with the necessary investor protection protocols.

ASIC published guidance on the legal responsibilities of Australians when it comes to conducting, or investing in, ICOs in September.

One Thing is certain, though, Australia interest rates are still low, making income hard to come by and keeping the focus for many investors on high yielding stocks.

A report from Australia's consumer watchdog found many locals got caught up in "pyramid" cryptocurrency schemes previous year, hoping to capitalise on the "success" of bitcoin.

ASIC Moneysmart page - Investor warnings on Initial Coin Offerings (ICOs) and cryptocurrencies.

In 2017, the ASIC configured guidelines on ICO's raising of funds to once again remind them about their obligations prior to any token issuances. ASIC said at the time, "ASIC recognizes that ICOs have the potential to make an important contribution to the options available to businesses to raise funds and to investment options available to investors".

ASIC's corporate plan from a month earlier notes that the crypto-asset sector was small but growing fast, "resulting in increased regulatory monitoring". ASIC is open for new financial innovations but not at the expense of basic consumer protection.

Other reports by Click Lancashire

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