ASIC Announces Guidance for Crypto ETPs in Australia

ASIC has today published guidance in relation to crypto-asset exchange traded products (ETPs) and other investment products.

The Australian Securities and Investments Commission, Australia’s financial watchdog, wants to make sure product issuers and market operators are in the know on how they can meet their regulatory obligations.

The information covers good practices for market operators in how they admit and supervise these products and good practices for product issuers in how they establish and operate these products.

The regulator has included admission and monitoring standards in its guidance, as well as custody of crypto-assets, pricing methodologies, disclosure, and risk management.

ASIC’s good practices are set out in Information Sheet 225 Crypto-assets (INFO 225) and Information Sheet 230 Exchange traded products: Admission guidelines (INFO 230).

Australia’s regulatory body has informed responsible entities that intend to hold underlying assets that comprise crypto-assets will need to hold an authorization in relation to crypto-assets.

To that effect, ASIC introduced a new ‘crypto-asset’ category in the licensing application for these entities. For more information on that, firms can check INFO 225, which contains details on the matter and, soon, updates to relevant forms and regulatory guides.

“Crypto-assets have unique characteristics and risks that must be considered by product issuers and market operators in meeting their existing regulatory obligations. The good practices we published provide practical examples of how these obligations may be met, in a way that maintains investor protections and Australia’s fair, orderly and transparent markets”, said ASIC Commissioner Cathie Armour.

In June 2021, ASIC launched a public consultation on Crypto-assets as underlying assets for ETPs and other investment products in order to reach for proposals to establish good practices for these products within the existing regulatory regime and changes to the licensing regime.

Most of the submissions received were generally supportive of ASIC’s proposals, others raised comments, questions, or suggestions for ASIC to consider.

For more information on those non-confidential submissions and ASIC’s considerations, firms can read the detailed Report 705 (Response to submissions on CP 343 Crypto-assets as underlying assets for ETPs and other investment products).

On 20 October 2021, the Senate Select Committee on Australia as a Technology and Financial Centre released its Final Report, with recommendations on developing an Australian regulatory framework for crypto-assets.

ASIC is collaborating with the Select Committee, the Treasury, and Government as they consider recommendations in the Final Report.