ASIC sets ground rules for crypto operators

ASIC has begun the difficult task of setting regulatory ground rules for product issuers and market operators with the release of crypto-asset related investment product guidance.

The guidance covers good practice on how to “admit and supervise” crypto products and touches on admission and monitoring standards, custody of crypto-assets, pricing methodologies, disclosure and risk management.

It contains a number of important considerations for market purveyors, including the stipulation that responsible entities that intend to hold underlying crypto-assets must have a specific license for it. To cater for this, ASIC has created a new ‘crypto-asset’ category in the licensing application for entities.

The report comes on the back of the Senate Select Committee on Australia as a Technology and Financial Centre’s final report into the future of digital assets in Australia, released last week, which laid a blueprint to reform the sector headlined by the establishment of a market licensing regime for digital currency exchanges.

It also follows ASIC’s public consultation (CP343) which looked at crypto-assets as underlying assets for exchange traded and other investment products.

“Crypto-assets have unique characteristics and risks that must be considered by product issuers and market operators in meeting their existing regulatory obligations,” commented ASIC commissioner Cathie Armour. “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.”

According to the report 25 per cent of Australians hold or have previously held crypto-assets.

Provider Betashares is preparing to launch a “crypto-innovators” ETF in Australia soon.