Australian Regulator to Apply Market Rules to Crypto

The Australian Securities and Investments Commission (ASIC), Australia’s primary securities regulator, has recently revealed its plans to increase the scrutiny of Initial Coin Offerings and Cryptocurrencies as part of its ‘Corporate Plan’ that was published on Friday. The 2018 to 2022 corporate plan outlines the regulator’s areas of focus for the aforementioned period and at the top of the list of its agenda is “monitoring threats of harm from emerging products” such as digital currencies or assets as well as Initial Coin Offerings.

For 2018 and 2019, ASIC revealed that it has been working on a new framework that will be tailored to apply the “principles for regulating market infrastructure providers to crypto exchanges”. From here, the framework will also provide intervention mechanisms in cases where “there is poor behavior and potential harm to consumers and investors.”

“Potential harms from technology driven by the growing digital environment and structural changes in financial services and markets,” ASIC announced in the plan. “We will continue to focus on monitoring threats of harm from emerging products (e.g. ICOs and cryptocurrencies), cyber resilience, the adequate management of technological solutions by firms and markets, and misconduct that is facilitated by or through digital and/or cyber-based mechanisms.”

ASIC has had plans for tighter scrutiny of the Australian cryptocurrency industry right from May this year when it announced that it had found “misleading or deceptive” marketing statements following a probe into some Initial Coin Offering issuers with a public notice.

Consequently, as part of the regulator’s new plans, it will be keeping a close eye on Initial Coin Offerings in particular with the aim of ensuring that they comply with the existing regulations.

“Monitoring emerging products, such as ICOs, and intervening where there is poor behavior and potential harm to consumers and investors,” the report outlines.

In addition to that, the regulator will also be developing its own approach for “applying the principles for regulating market infrastructure providers to crypto exchanges.”

Existing Regulatory Frameworks

Australia’s domestic crypto exchanges are already regulated under the watchful eye of the Australian Transactions and Reporting Analysis Center (AUSTRAC) – AUSTRAC is the country’s main financial intelligence agency that doubles up as a financial watchdog as well.

One of the regulations that the crypto exchange operators have to adhere to requires them to enroll in AUSTRAC’s Digital Currency Exchange Register. They also have to comply with the mandatory anti-money laundering, counter-terrorism financing obligations, and last but not least, the usual know your customer (KYC) requirements.

ASIC is yet to issue any pertinent regulation for cryptocurrency regulations but last year it published guidelines for businesses wishing to conduct ICOs – these are still in use.