Australian regulator issues fresh guidance regarding ICOs and crypto assets, but gaps remain

The Australian Securities and Investments Commission (ASIC) has issued updated guidance to local cryptocurrency companies conducting initial coin offerings (ICOs).

In short, if their tokens fall under the category of a financial product or involve financial products like a security, an Australian financial services (AFS) license is required and the issuer must comply with the Corporations Act.

According to ASIC Commissioner John Price, businesses should research whether they are in compliance with “all relevant Australian laws", including local Consumer Law, hoping to prevent users being misled as well as the issuance of unregulated securities. Price warned that "Australian laws will also apply even if the ICO or crypto-asset is promoted or sold to Australians from offshore."

The guidelines also outline requirements for crypto-asset intermediaries who offer advice or deal in crypto assets, miners, as well as exchanges and trading platforms. Meanwhile, wallets and custody service providers need to ensure they have appropriate custodial and depository authorisations. 

Tazmania-based Alex Saunders has been working closely with the Australian government in recent months, hoping to soothe the government’s increasingly sceptical attitude towards crypto. However, he told The Block the laws mainly clarify "what we already knew" and that "the hard part is still determining a utility token vs what they want to classify as a security."