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Australian regulator (ASIC) issues guidelines to ensure transparency of crypto-asset products

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TL; DR Breakdown

  • Australian regulatory authority (ASIC) produces new directives for crypto-asset products.
  • Public consultations began in June, and now the regulatory authority has set the guidelines.

On Friday, the Australia Securities and Investments Commission (ASIC) put forward a set of guidelines for funds that want to offer crypto exchange-traded products ETPs. 

The platforms must have a license to ensure they are reputable firms working under the law. Crypto ETFs need to have a good foundation. The assets should have significant support from several companies. They need to have trusted service providers, a knowledgeable market, and a regulated futures market. Additionally, their price mechanisms should be trustworthy.

With this directive, the crypto-asset investment products will have transparency, thus upholding investors’ security.

Public consultations

The regulatory authority released the requirements in response to the public consultation on cryptocurrency (ETPs), exchange-traded funds (ETFs), and structured products.

Several industries have been relieved to have the agency’s response since the negotiations began in June. ETPs backed by Bitcoin (BTC), and Ether (ETH) have been allowed to run their activities under the guidelines.

The crypto sector has seen significant growth this year. However, several financial institutions in Australia have turned a blind eye to the sector because of their volatility. The watchdog is hopeful that other crypto assets will join the ETPs wagon soon.

ASIC aims to protect investors

Licensed exchanges need to review if the issuer can fulfill its obligations concerning the product. The requirements apply to each crypto ETF product request. The new applications will be assessed differently, disregarding whether an issuer has issued other products in the past.

According to ASIC, they do not need domestic crypto custody for entities issuing crypto ETFs. The agency believes that such measures would limit competition unjustly.

According to a document by the agency, they acknowledge the issues brought forth by respondents on overseas-based custody of crypto assets. People are concerned about the potential for difficulties in recovering assets across jurisdictions. However, ASIC considers it would be unfit to mandate a domestic custodian requirement.

All the guidelines are essential to maintain a just, regulated and transparent market. If everything goes as planned, investors are assured that only reputable crypto-assets capable of being supported within the ETP structure are in operation.

With the crypto market evolving, ASIC may adjust the directives in the future. As they adjust their documentation, licensed Australian exchanges need to adhere and adapt to change to serve the community better.

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