ASIC looking to regulate overseas ICOs under Australian laws

Posted: 27 April 2018 4:32 pm
News

Australian regulations may apply to ICOs, even when created and offered overseas, warns commissioner.

ASIC will be eyeing initial coin offerings (ICOs) as it moves to update its guidelines for companies raising funds by issuing digital currencies or tokens. Specifically, it warns that Australian laws may apply to ICOs even when they're created and offered from overseas.

"We will highlight that Australian corporate and consumer law might apply – even if the ICO is created and offered from overseas," said ASIC Commissioner John Price at a Sydney fintech event. "This is an important point given the international nature of this sector. I think you can expect a strong focus from us in this area."



ICOs are a lot like an initial public offering of stock, except they involve the selling of digital tokens and are largely beyond regulation in many markets. This has led to "a certain level of opportunism" in the space, Price says.

It's estimated that about 10% of funds raised in ICOs end up being stolen, making it a high risk option for potentially unwary consumers. These might disappear through exit scams, hack attacks, because the project just wasn't that good, or because the inexperienced founders realise – after raising millions of dollars of investor money – that hard work on a meaningful digital currency project is a lot less appealing than retiring early.

The general shadiness of the ICO space has seen corresponding growth in businesses that aim to help customers separate the good ICOs from the bad, but these often get it wrong and simply end up instilling a false sense of confidence.

ASIC is worried that the stories which come out about shady or immature businesses could diminish investor confidence, Price said.

According to Price, ASIC will be focusing on clarifying guidance around ICOs in Australia, including highlighting how Australian laws prohibiting misleading or deceptive conduct will apply in the cryptocurrency fundraising space.


Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, BTC, NANO

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Latest cryptocurrency news

Picture: Shutterstock

Latest crypto guides

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site