Tag: ASIC

Categories
Australia DeFi Illegal Regulation

ASIC Sues Aussie Fintech Company Block Earner Alleging Unlicensed Services

Australia’s financial markets watchdog is taking Aussie crypto platform Block Earner to court for allegedly providing unlicensed financial services and running an unregistered managed investment scheme. 

The Australian Securities and Investments Commission (ASIC) announced Wednesday November 23 that it had commenced civil penalty proceedings against Block Earner — the trading name for Web3 Ventures — in the Federal Court.

“We are concerned that Block Earner offered financial products without appropriate registration or an Australian Financial Services licence, leaving consumers without important protections. Simply because a product hinges on a crypto-asset, does not mean it falls outside financial services law.”

ASIC Deputy Chair Sarah Court

ASIC has been active when it comes to enforcement in the crypto space of late, taking legal action against the company being the Qoin token in October this year.  

Block Earner CEO Cites Lack of Regulatory Clarity

Bringing decentralised finance to the masses has been the catch-cry of Block Earner, which offers a range of fixed annual yield products backed by crypto, USD reserves and physical gold. ASIC said Block Earner’s crypto-asset-related offerings were financial products, which comes with a requirement to hold an AFS licence — which Block Earner does not have.

Speaking to Business News Australia, Block Earner co-founder and CEO Charlie Karaboga described the legal action as a “disappointing outcome”. He said the startup had invested in infrastructure to be able to operate compliantly and protect its customers against crypto market volatility. 

“Needless to say, lack of clarity around regulation in Australia for cryptocurrency-related products creates friction between regulators and innovators like Block Earner in our industry. In an ideal world, we would build these products in a regulatory sandbox with more clarity around licensing regimes. In the future, we look forward to working with ASIC and other regulators in this space to make Australia an innovative space for the crypto industry.”

Block Earner co-founder and CEO Charlie Karaboga

ASIC Supports Regulation to Protect Consumers

ASIC said it supports the development of an effective regulatory framework covering crypto assets in order to protect Australian investors — who have demonstrated a strong interest in crypto. 

Research released by ASIC in August 2022 found many new, young investors had become active in financial markets and 44 percent reported holding crypto. Just 20 percent of crypto owners considered their investment approach to be ‘risk-taking’, and many said they sourced information from social media, podcasts and financial influencers.

In its statement about legal proceedings against Block Earner, ASIC highlighted its concerns about consumers’ vulnerability in their rush to embrace crypto:

“Crypto-assets are risky, inherently volatile and complex and ASIC remains concerned that potential investors in crypto-assets may not fully appreciate the risks involved. ASIC supports the development of an effective regulatory framework covering crypto-assets to protect consumers and investors.” 

ASIC Deputy Chair Sarah Court
Categories
Australia ETFs Investing Regulation

Brisbane-Based ‘Monochrome’ Gets Approval for Spot-Based ETF  

A Brisbane asset management company will offer spot-based crypto exchange traded funds (ETFs), becoming the first to be authorised under an Australian financial services licence (AFSL).

Monochrome Asset Management announced on August 15 that it had gained approval from financial services regulator the Australian Securities and Investments Commission (ASIC) to operate spot-based crypto ETFs under an AFSL. 

The approval opens the door for retail investors to benefit from fully regulated and direct insured exposure to crypto assets, including Bitcoin and Ether. The funds will be headlined by the Monochrome Bitcoin ETF (ticker code: IBTC).

To date, no crypto asset ETFs operate under an AFSL with a crypto-asset authorisation. ASIC’s decision to provide this AFSL authorisation opens new regulated investment opportunities for direct retail investors and through licensed financial advisers.

Monochrome Asset Management

ASIC Approval Offers Regulated Crypto Investing

Monochrome’s spot-based crypto ETFs are not the first launched in Australia – that honour went to ETF products established by Sydney-based Cosmos Asset Management in May, followed closely by 3iQ’s launch of a Bitcoin and Ethereum feeder ETF in June. 

However, Monochrome being the first to operate an ETF under an AFSL – a licence issued by ASIC that’s required to run a financial services business – could be a key differentiator for investors seeking trustworthy advice and investment vehicles.

Monochrome CEO Jeff Yew said that in addition to meeting market demand, its ETF would give crypto investors the protection of a “much higher degree of regulation”.

The regulator’s approval of this licence variation represents a major step forward for both the advice industry and retail investors, allowing advisers to meet the market demands of their clients when it comes to the nascent crypto-asset class. 

Jeff Yew, CEO, Monochrome Asset Management
Categories
Australia Crypto News Investing Regulation

ASIC Chair ‘Troubled’ by Extent of Risk Taken in Crypto Investing

The Australian Securities and Investments Commission (ASIC) has admitted it holds concerns over the crypto investment increase seen during the Covid-19 pandemic, particularly among new, inexperienced investors.

According to ASIC’s new investment behaviour research, conducted among more than 1000 investors in November 2021, crypto was the second most common investment product last year.

Almost Half of Investors Own Crypto

ASIC chairman Joe Longo pointed to the increasing number of new investors buying cryptocurrency without fully understanding the associated risks.

Of those surveyed, 44 percent of investors stated they owned crypto, and of these, 25 percent claimed crypto was their only investment:

https://www.finsia.com/news-hub/the-standard/joe-longo-will-make-access-affordable-financial-advice-one-his-priorities

According to the survey, only 20 percent of cryptocurrency owners considered their investment approach to be ‘risk-taking’, raising concerns that investors did not understand the risks of this asset class.

Joe Longo, ASIC chairman

Perhaps even more concerningly, 41 percent of investors surveyed stated they had received their investing information from social media platforms – predominantly Reddit, TikTok, Facebook, and YouTube.

Longo finds these figures troubling and believes consumers are failing to weigh the risks and fully understand what they are participating in. Andrew Bragg, a NSW Liberal Senator and vocal proponent of the crypto industry, agrees with Longo and recommends “sweeping reforms to regulate crypto”.

ASIC Pleads for Smart Investing

April 2022 was a notable month for ASIC warnings regarding cryptocurrency and other financial matters. Firstly, the regulator released a guidance note for Aussie ‘finfluencers’. The document outlined which financial influencers could be in breach of the law, and recommended these people check they had the right qualifications to be providing financial advice. The move was met with contention by many ‘finfluencers’ at the time.

Only days later, ASIC’s former chairman Greg Medcraft called for urgent Australian crypto regulatory clarity. Medcraft, joined by venture capitalist Mark Carnegie, requested that Aussie regulators join the crypto start-up race. According to the Australian Financial Review, Medcraft hoped to develop a plan to encourage digital asset tech and investment.

Categories
Australia Crypto News ETFs Regulation

Senator Bragg Intervenes in Crypto ETF Race, Backing Local Investment Managers

Andrew Bragg, an Australian Liberal Senator and pro-crypto lawmaker, has requested that the Australian Securities and Investments Commission (ASIC) back local investment managers for the first Aussie crypto exchange traded fund (ETF).

Senator Bragg has addressed a letter to ASIC strongly recommending that the interests of Australian investment managers are kept in mind as the country’s first crypto ETF moves closer to fruition. The letter stated:

It would be a very regrettable outcome if foreign exchange-traded funds with direct exposure to cryptocurrency were widely available before domestic products.

NSW Senator Andrew Bragg to ASIC chairman Joseph Longo

While Bragg said he would not retaliate against the development of digital assets by foreign companies, he suggested that ASIC prevent them from capitalising on the delays that local firms are experiencing. The planned Aussie ETFs were supposed to have been greenlit a week ago, and Bragg expressed that he would be hesitant to see foreign products dominating Australian ones.

'This is a good and fair idea': Liberal senator Andrew ... https://www.theage.com.au/politics/federal/this-is-a-good-and-fair-idea-liberal-senator-andrew-bragg-backs-indigenous-voice-to-parliament-20190724-p52adz.html
NSW Senator Andrew Bragg backs local crypto ETFs.

Crypto ETFs: Momentum and Setbacks

April 2022 saw the Australian crypto ETF race heat up following the announcement of two more listings being ready to launch. These include the first Ethereum ETF and another Bitcoin ETF.

However, a week ago it was announced that the first crypto ETFs had been delayed due to an issue with an undisclosed third-party broker. This follows several tumultuous months. The hold-up was allegedly the result of standard checks prior to trading – no further information was given.

Categories
Australia Banking Investing Regulation

Commonwealth Bank’s Crypto App Delayed Due to Regulatory Hurdles

The Commonwealth Bank of Australia’s (CBA) plan to offer 10 popular cryptocurrencies to customers through its banking app has been delayed due to regulatory issues as the Australian Securities and Investments Commission (ASIC) ensures the offering complies with its new design and distribution rules.

CBA announced its intention to start selling crypto direct to retail customers in November 2021, marking the first offering of this kind by any Australian bank.

First Foray May Help Clarify Regulatory Approach

The main regulatory sticking points for ASIC relate to the product disclosure statement for the crypto products, the intended target market, and ensuring consumer protections. 

Speaking at this week’s Australian Financial Review Cryptocurrency Summit, ASIC commissioner Cathie Armour suggested CBA was having trouble ensuring its crypto products complied with the requirements of ASIC’s design and distribution rules:

We’re interested in any sort of new innovation where we think there [are] real benefits of innovation being within our regulatory regime. There are a bunch of rules there that you need to follow.

Cathie Armour, ASIC commissioner 

The delays CBA is facing now may clarify the regulatory landscape moving forward and encourage other banks and traditional financial organisations to start offering crypto products.

Partnership Means Investor Funds Held Offshore

To help create its crypto offerings, the CBA has partnered with US-based cryptocurrency exchange Gemini. Under the partnership, Gemini provides custody services, which means investor funds are held offshore under the jurisdiction of the New York State Department of Financial Services. 

Pro-crypto NSW Senator Andrew Bragg has described this arrangement as “not ideal”, suggesting he’d eventually like to see Australian-based custodial services: “I think there’ll be some moral pressure on organisations in Australian businesses.”

Despite the regulatory issues it has faced, CBA has said the initial pilot of its in-app crypto offering was highly successful and that it intends to invest heavily in more crypto-related services in the future.

Categories
Australia Crypto News Cryptocurrency Law Regulation

ASIC Releases Guidance Note for Australian ‘Finfluencers’

The Australian Securities and Investment Commission (ASIC) has released a document outlining which financial influencers may be in breach of the law. The move is being met with contention by many of these so-called “finfluencers”:

Digital Assets Are ‘Financial Products’: Senator

Finfluencers have the capability to offer incorrect, or unwise, financial information or products to their followers, either intentionally or accidentally. Some of the points on this guidance note include ensuring finfluencers are properly licensed to deal in a financial product or provide advice on a product, along with managing content to ensure it is accurate and balanced.

While the guide does not explicitly mention the crypto industry and its advisers and influencers, as crypto is counted as “investing services”, the rules still apply. This is backed up by pro-crypto NSW Senator Andrew Bragg.

https://www.linkedin.com/in/andrew-bragg-3296b823/overlay/photo/

ASIC’s current policy applies the law to crypto to the extent that digital assets fall within the definition of a financial product.

Australian NSW Liberal Senator Andrew Bragg

The move from ASIC is being heavily critiqued online by several financial influencers, with many suggesting the guide is all-encompassing in the sense that almost anything in the way of advice could still influence someone to invest.

The tighter regulations will come with penalties of up to five years’ jail for individuals and extreme fines for corporations.

ASIC Cautions Investors and Exchanges

ASIC has issued finfluencer warnings in the past, with the commission last year urging young investors in particular to be cautious. ASIC has stated that while using social media is a viable means of collecting background information on a topic, such info may be unlicensed and inaccurate.

More recently, ASIC has issued a warning aimed at crypto companies, informing them that they should expect tighter regulations in the future with the aim of pulling the crypto industry into line with traditional financial industries.

Categories
Australia Crypto Exchange Cryptocurrency Law Regulation

Australia Announces ‘Badge of Approval’ Certificates For Crypto Exchanges

The Australian Securities and Investments Commission (ASIC) has announced that crypto exchanges can now receive a tick of approval. Any exchange that is government-approved will earn a “badge” signifying a uniquely Australian stamp of quality.

Senator Jane Hume, federal Minister for the Digital Economy, announced a market licensing regime for crypto exchanges at Australian Blockchain Week 2022.

https://www.senatorhume.com/about/about-senator-hume

Australian investors will be sure that if they use a licensed Australian exchange, they can trust that exchange will deliver on its commitments to customers and have appropriate protections.

Jane Hume, Minister for the Digital Economy

Senator Hume stated that she believes the way forward for the Australian crypto industry is through the regulation of exchanges. While ASIC badges of approval represent only a small change, it is seen as a positive step toward local cryptocurrency integration.

ASIC Busy on the Crypto Front

ASIC has had to deal with a plethora of cryptocurrency-related concerns recently, issuing a variety of warnings to Australian exchanges and investors. Most recently, it warned crypto companies to expect greater regulation in future, in line with those governing traditional finance companies.

In July 2021, ASIC chairman Joe Longo declared crypto trading a “significant area of concern“, particularly in the wake of the Covid-19 pandemic. And, in November 2021, ASIC shut down A One Multi, an unlicensed financial services business based on Australia’s Gold Coast, for suspected unlawful activity.

Categories
Australia Cryptocurrencies Cryptocurrency Law Regulation

ASIC Warns Aussie Crypto Companies to Expect Higher Regulation Moving Forward

The Australian Securities and Investments Commission (ASIC) has warned cryptocurrency companies that they will be held to the same standards as traditional finance companies, as the prospect of digital asset regulation strengthens.

The news was shared by ASIC commissioner Cathie Armour at Blockchain Australia’s crypto conference on March 24.

Higher Crypto Regulations Coming

Armour detailed to conference attendees that the “growing maturity” of the crypto industry means that crypto businesses may need to alter how they interact with the regulator. Businesses looking to offer crypto-related products will be expected to meet the same requirements as all other companies in the wider finance industry.

https://www.linkedin.com/in/cathie-armour-50b89013a/overlay/photo/

We’re doing this because we’re keen to maintain our robust regulatory framework. We’re really looking for industry to work closely with us and to do a lot of their own homework to navigate the details.

ASIC commissioner Cathie Armour

This isn’t the first time Armour has bestowed a warning on the financial industry. She has previously stated that Aussie influencers – specifically, “finfluencers” – could face up to five years’ jail time for breaking financial advice laws.

Past ASIC Warnings to Investors

ASIC is repeatedly warning investors about various dubious practices occurring within the financial industry. Most recently, the regulator cautioned against switching to a self-managed super fund (SMSF) to invest in crypto. Following an increase in crypto marketing for “investment opportunites”, Aussies were being “enticed” to switch to an SMSF before investing.

In October 2021, ASIC began joining investor Telegram groups to warn about an increase in pump-and-dump schemes. ASIC contacted one particular private Telegram group of 288 members, involving potentially illegal market tip-offs, to warn those involved that they were being monitored.

In August 2021, ASIC again cautioned Aussies to beware of unlicensed crypto companies. The warning was warranted due to an increase in losses from trading crypto-related products.