The Australian Securities and Investments Commission (ASIC) recently opened a consultation for establishing methods and best practices for regulating crypto assets. The consultation paper seeks guidance on which crypto-assets should qualify as underlying assets, and how to make this determination. The proposal could signal the emergence of new crypto-based products in the Australian market.
Australian Regulator Seeks Advice
The Australian Securities regulator issued a public consultation paper to decide how to regulate cryptocurrency-based products. The paper, titled “ASIC consults on crypto-asset-based ETPs and other investment products,” seeks advice on several key subjects that could affect the issuance of cryptocurrency-based derivatives, such as ETPs.
To ASIC, cryptocurrencies are special assets whose impact needs to be regulated with tighter standards. In the paper, ASIC states they are:
Aware of interest in, and demand for, domestic cryptoasset ETPs. However, we are also aware of the real risk of harm to consumers and markets if these products are not developed and operated properly.
The paper recognizes several kinds of crypto assets, stressing not all cryptocurrencies qualify as underlying assets. However, the ASIC proposes a series of conditions a crypto asset must fulfill to be an underlying asset: a high level of institutional support, the availability of service providers to support ETPs providing exposure to the crypto-asset, a mature spot market, a regulated futures market, and the availability of robust and transparent pricing mechanisms.
Australia Could Follow Canada and Brazil’s Lead
With this consultation, the Australian government signals its openness to provide regulations adjusted to the reality of the market. Many think this is a very different proposition, compared to what governments like China are doing. China is orchestrating a total cryptocurrency crackdown by ousting exchanges and mining operations from its territory.
However, Australia seems more neutral when it comes to crypto. Financial Services Minister Jane Hume declared in May that Australians were free to invest in these assets while complying with existing regulations. She stated:
We take no issue with consumers investing in cryptocurrencies. But like investment in any asset class, they are subject to Australian law, including our market conduct, know-your-client, and tax laws. It is not a free pass.
In conclusion, the goal is for investors to finally have a cryptocurrency-based ETF available in the country. As a result, the task of retail and institutional investors wanting to get exposure to cryptocurrencies would be simplified. Australia could follow countries like Brazil and Canada, that already have crypto ETF products by way of issuing crypto-friendly regulatory frameworks.
What do you think about the latest consultation paper issued by the ASIC? Tell us in the comments section below.