On 28 May 2019, the International Organization of Securities Commissions (IOSCO) published Consultation Paper CR02/2019 (Paper), which identifies the risks and regulatory considerations associated with the trading of crypto-assets on crypto-asset trading platforms (CTPs). The Paper seeks input from industry participants amid a growing demand for an international approach to the regulation of crypto-assets, recently illustrated by the G20’s joint request for global regulators to monitor risks and consider multilateral responses in relation to crypt-assets as needed.Read More
On 30 May 2019, the Australian Securities and Investments Commission (ASIC) updated its Information Sheet 225 which sets out guidance for entities that are looking to raise funds through initial coin offerings (ICOs) or are otherwise involved with crypto-assets. Interestingly, ASIC has grouped crypto-asset participants into several distinct categories and has broadly set out the obligations that may apply to participants in each category.
Particular aspects of the information sheet that may be of interest to crypto-asset participants include:
- ASIC has stated that entities should be prepared to justify a conclusion that their ICO does not involve a regulated financial product;
- platform operators that allow crypto-assets that are financial products to be traded on the platform must hold an Australian market licence or be otherwise exempt. As at the time of release, there are no platform operators that have been appropriately licensed or exempt;
- assessments of Australian Financial Services (AFS) licence applications for the purposes of crypto-asset-related financial products may take more time; and
- clearing and settlement obligations may apply to “miners” that are part of the clearing and settlement processes for tokens that are financial products.
In summary, while ASIC’s updated Information Sheet does not break any new ground in relation to the regulation of crypto-assets in Australia, it serves as a useful resource for any entity that is looking to be involved as a crypto-asset participant. We remind our readers there are many avenues to market for token issuers, even where their tokens constitute financial products, and it may be useful to seek legal advice in this regard. For example, tokens that only constitute securities can be offered to sophisticated investors without attracting significant disclosure obligations including the provision of a prospectus.
On 10 October 2018, the Financial Stability Board (FSB) released a report assessing the risks and implications of crypto-assets on financial stability. The FSB considered that the growth of crypto-asset trading platforms, the introduction of new financial products (crypto-asset funds and exchange-traded products) and growing interest by retail investors together could lead to implications on global financial stability.
In its report, the FSB assessed the primary risks in crypto-asset markets which could expose and undermine confidence in the financial system and in financial regulators.
The Financial Stability Board (FSB) has published a report to the G20 on the crypto-assets work of the FSB, Committee on Payments and Market Infrastructures (CPMI), International Organisation of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS).
IOSCO confirms its belief that crypto-assets and platforms do not a pose global financial stability risk, nonetheless they raise other significant concerns (potentially needing further regulation) regarding investor protection, market integrity and money laundering. IOSCO suggests that it could work more closely with BCBS and CPMI for payment coin exchanges, which could be viewed more as spot market exchanges/payment infrastructures.