Search
Close this search box.

We are creating some awesome events for you. Kindly bear with us.

Australian Securities and Investments Commission issues guidance for issuers of Initial Coin Offerings

Australian Securities and Investments Commission issues guidance for issuers of Initial Coin Offerings

Last week, the Australian Securities and Investments Commission (ASIC) released guidance to help issuers of Initial Coin Offerings (ICOs) consider their legal obligations when offering coins or tokens.

A business or individual can raise funding by creating and selling its own cryptocoins or tokens in exchange for cryptocurrencies of immediate, liquid value such as Bitcoin or Ethereum. Startups use this to avoid the rigorous and regulated pathways of going via banks or venture capital firms or doing a regular IPO (Initial Public Offering or the initial offer of shares of previously private company to the public). The ICOs are often global offerings which can be created anonymously and/or accepted anonymously.

Crowd funding using an ICO is not the same as the 'crowd-sourced funding' (CSF) that is regulated by the Corporations Act since 29 September 2017. ASIC recognises that ICOs have the potential to make an important contribution to the options available to businesses to raise funds and to investment options available to investors.

But it also says that an ICO must be conducted in a manner that promotes investor trust and confidence, and complies with the relevant laws. It notes that a number of international regulators have issued guidance on the application of their securities and financial services laws on ICOs. For instance, the Monetary Authority of Singapore (MAS) clarified in August that the offer or issue of digital tokens in Singapore will be regulated by MAS if the digital tokens constitute products regulated under the Securities and Futures Act

ASIC Commissioner John Price said, “We want to ensure innovative firms understand the regulatory framework they may be operating under and ensure they meet any obligations they may have when raising funds in Australia.”

ICOs vary in nature and may raise funds for a variety of projects, including the development of a new cryptocurrency or distributed ledger technology (for example, Blockchain) related services. Anyone with access to the internet can create or invest in an ICO.

In Australia, the legal status of an ICO is dependent of the circumstances of the ICO, such as how the ICO is structured and operated, and the rights attached to the coin (or token) offered through the ICO. An ICO could be considered to be an offer of services or products or it could be equivalent to a managed investment scheme, an offer of shares or even a derivative and it would be subject to regulations accordingly. Information sheet 225 provides guidance about the potential application of the Corporations Act 2001 to businesses that are considering raising funds through an initial coin offering.

ASIC and the Australian Competition and Consumer Commission (ACCC) also jointly warned people of the potential risks of investing in ICOs.

“ICOs are highly speculative investments, are mostly unregulated and the chance of losing your investment is high," ASIC Commissioner John Price said, “Consumers should understand the risks involved, including the potential for these products to be scams, before investing.”

ASIC's MoneySmart website has published guidance for investors on the risks of investing in initial coin offerings. Risks highlighted include the difficulties for regulators in ensuring that proper investor protections are in place because ICOs are sold internationally, online and usually paid for with virtual currencies, rapid fluctuation in the value of ICO tokens, their correlation to other tokens which restricts hedging risk through diversification and the possibility of digital wallet being stolen by a hacker, with little possibility of getting anything back.

Innovative businesses can contact the ASIC's Innovation Hub for assistance in understanding the regulatory framework. The Innovation Hub provides the opportunity for entrepreneurs to understand how regulation might impact on them. It is also helping ASIC to monitor and understand fintech developments.

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

PARTNER

As a Titanium Black Partner of Dell Technologies, CTC Global Singapore boasts unparalleled access to resources.

Established in 1972, we bring 52 years of experience to the table, solidifying our position as a leading IT solutions provider in Singapore. With over 300 qualified IT professionals, we are dedicated to delivering integrated solutions that empower your organization in key areas such as Automation & AI, Cyber Security, App Modernization & Data Analytics, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Renowned for our consulting expertise and delivering expert IT solutions, CTC Global Singapore has become the preferred IT outsourcing partner for businesses across Singapore.

PARTNER

Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

SUPPORTING ORGANISATION

SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

PARTNER

HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

PARTNER

IBM is a leading global hybrid cloud and AI, and consulting services provider, helping clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,800 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently, and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity, and service. For more information, visit www.ibm.com