ASIC Corporate Plan Casts Crypto Spotlight
ASIC handed down its current Corporate Plan today - a 4 year strategic plan which includes crypto-assets as one of ASIC's "core focus" areas.
A large part of ASIC's role is to monitor, promote and preserve the integrity of Australia's financial system. As a means of satisfying it's statutory objectives and requirements under the ASIC Act, the Plan sets out the regulator’s priorities and actions over the next four years.
This years report details ASIC's 8 core strategic projects including scams, sustainable finance practice, design and distribution obligations, breach reporting, cyber and operational resilience, financial accountability regime (FAR), digital technology and data and crypto-assets.
In the explanatory summary of the crypto asset project ASIC says:
Crypto-assets and decentralised finance (DeFi) are global phenomena that reach beyond geographic jurisdictions and the remit of any single Australian regulator. ASIC will take action to protect investors from harms posed by crypto-assets that fall within our remit. We are committed to using the full range of our powers to preserve the integrity of the Australian financial markets
This announcement follows swiftly after the Office of Treasury announced the Federal Government's plans to commence token-mapping work with a view to identify and sensibly regulate the varying categories of crypto assets that exist, signaling the governments serious approach to moving forward with the improvement of regulation within the industry, albeit using language that will be of concern to the tech industry (focusing on "risk" and talking about "full range of ... powers" with little mention of supporting innovation and helping the huge jobs and economic growth distributed ledgers and crypto-assets bring stay in Australia).
ASIC is intending to:-
Support the development of an effective regulatory framework focused on consumer protection and market integrity following the recent consultation by Treasury - which appears to be a reference to the CASSPr regime consultation for centralised digital currency exchanges to become licensed;
Take enforcement action to protect consumers from harms associated with crypto-assets, including those that mimic traditional products but seek to circumvent regulation - this is a very interesting comment given the guidance to date from ASIC on crypto-assets has been limited to "signposting" risks without providing any bright line guidance and could be a hint of "regulation by enforcement" similar to what has been seen in the USA by their SEC;
Supervise and assess Product Disclosure Statements and target market determinations of major crypto offerings within ASIC's jurisdiction - as crypto platforms have acquired financial services licenses in order to offer leveraged trading and derivatives, so ASIC is now saying they will be specifically targeting "major crypto offerings", but its unclear what that is.
Implement and monitor the regulatory model for exchange traded products with underlying crypto investments - this appears a follow on from the new crypto-asset authorisation introduced for crypto ETFs seeking to list a spot ETF.
Raise public awareness of the risks inherent in crypto-assets and DeFi - so expect more press releases about dangers and scams; and
Work with domestic and international peers to monitor risks, develop coordinated responses to issues and develop international policy regarding crypto-assets and DeFi - a continuation of the work ASIC does as part of IOSCO and connecting with other regulators overseas.
One item which many in the industry would wish to see would be industry consultation and development of a regulatory framework which permits revolutionary new forms of blockchain powered financial tools to operate in a compliant way so as to bring the rules designed for a centralised world into a decentralised one.