As an end of financial year gift, ASIC released Consultation Paper 343: Crypto-assets as underlying assets for ETPs and other investment products (CP 343). However, there is still some way to go before crypto-asset, cryptocurrency, or digital asset ETPs become mainstream investments in Australia.
In particular, ASIC is proposing to:
identify crypto-assets that could be considered appropriate underlying assets for an ETP
establish a new category of asset and regulatory framework for crypto-assets
restrict the crypto-assets a registered managed investment scheme (MIS) is authorised to hold (e.g. to Bitcoin or Ether)
ASIC has also proposed expectations of "good practices" for:
robust and transparent pricing of crypto-assets
responsible entities, in relation to the custody of crypto-assets
the risk management systems of responsible entities that hold crypto-assets
responsible entities, in relation to their PDS disclosure obligations for registered managed investment schemes that hold crypto-assets
In relation to Australian Financial Services Licenses (AFSLs), ASIC is:
proposing to establish a new kind of asset to operate a registered MIS which holds a particular kind of asset
requesting if any aspects of the regime need to be clarified or modified to accommodate investment products that invest in, or provide exposure to, crypto-assets
ASIC is proposing to not provide further:
expectations in INFO 230 in relation to crypto-asset ETPs
guidance on how the design and distribution obligations (DDO) can be met for investment products that invest in, or provide exposure to crypto-assets
The authors are hopeful that the impact of this consultation paper is more wide reaching than being confined to ETPs and Investment Products with an underlying investment in cryptocurrency and that this may be the start of further positive dialogue from ASIC in relation to businesses in the digital currency industry.
If you would like to make a submission in response to the consultation, a response is due by 27 July 2021.