ASIC Annual Report provides update on action taken against ICOs
The ASIC Annual Report 2018-19 provides updates on action taken by ASIC concerning crypto-assets and how ASIC is "supporting legitimate cryto-asset business[es] in operating lawfully" through the issue of the updated Information Sheet 225 Initial coin offerings and crypto-assets.
That guidance still remains, at a "sign post" level, which poses a challenge for Australian projects compared to other countries offering greater certainty and much more of a detailed roadmap to and clear guide to compliance (such as the UK, Switzerland, Lichenstein and Singapore).
ASIC noted that it:
... has taken action to stop several proposed initial coin offerings or token‑generation events ... [and] have stopped the issue of a Product Disclosure Statement for a crypto‑asset managed investment scheme, and on five other occasions since April 2018 have acted to prevent ICOs raising capital without the appropriate investor protections. These ICOs have been put on hold and some are considering how to restructure to comply with relevant legal requirements.
These included the Red Dawn crypto fund, Neds Coin and several other ICOs which sought to connect the payment of dividends or ownership of assets to the tokens being sold, rightly being considered by ASIC as analogous to preference shares or interested in a managed investment scheme.
The Report noted that at the May 2019 at the International Organization of Securities Commissions Annual Meeting and the ASIC Annual Form 2019, issues around crypto-assets, artificial intelligence and machine learning, market fragmentation in securities and derivatives markets, and retail distribution and digitization were all discussed.
Issues around crypto-assets and initial coin offerings in Australia were also discussed at the Digital Finance Advisory Panel which helps ASIC support innovation in financial services and markets.
The members of the Panel consist of representatives of Treasury, APRA, the Reserve Bank of Australia, the Office of the Information Commission, the ACCC, AUSTRAC and Austrade.
Industry comments around the past INFO225 guidance are laid bare in the submissions by numerous parties to the Treasury review into Initial Coin Offerings, specifically requesting that guidance be more prescriptive to give greater certainty to crypto-businesses which are presently carefully looking at offshore options rather than remain in Australia. Blockchain Australia and others are working towards obtaining this certainty, but the wheels of regulation move slowly and carefully.