By Jim Bulling and Edwin Tan
The Australian Securities Exchange (ASX) has recently provided several comments in relation to entities that are listed or looking to list on the ASX that are involved in cryptocurrency-related businesses, such as developing cryptocurrency tokens, conducting Initial Coin Offerings and operating cryptocurrency exchanges.
At a minimum, entities must satisfy ASX that the business is bona fide, complies with all applicable legal requirements and that proper disclosures have been made to investors of the risks involved. Applicants looking to list LICs, LITs and ETFs that invest in cryptocurrencies (or their derivatives) must also satisfy ASX about matters relating to:
- the proposed investment strategy;
- their understanding of market volatility associated with cryptocurrencies (or their derivatives) and how the risks are managed;
- the knowledge and experience of the individual fund managers in relation to cryptocurrencies and highly volatile asset portfolios; and
- the suitability of the LIC, LIT or ETF as an investment for retail investors.
Listed entities that want to expand into a cryptocurrency-related business must also abide by their obligations to notify ASX of any proposed significant change in the nature or scale of their activities. ASX may require the entity to seek security holder approval and to re-comply with ASX admission and quotation requirements. Entities should seek guidance from their Listing Adviser and legal advisers before announcing any such proposals.