With blockchain startups such as PowerLedger, Clearpoll and Havven demonstrating strong Australian presence within the ICO space, as well as a series of Australian initiatives to embrace the wider Blockchain revolution, it was only a matter of time before regulators down under began to take a proactive approach to the emerging ICO phenomenon.
According to the Australian Financial Review, the Australian Securities and Investments Commission (ASIC) has created a task-force to examine and regulate Australian ICOs. Its main priority: cracking down on misleading or deceptive conduct. As ASIC commissioner John Price puts it, “the fundamental rule here is you can’t just make pie in the sky claims, you need something to back it up.“
ASIC’s move comes fresh from its receiving new powers from the Australian Competition and Consumer Commission granting it sole jurisdiction over the ICO space, even when the token is not a financial product.
All ICOs to Fall Under ASIC Remit
Price points out that “ICOs can be structured as many types of financial or non-financial products” which can lead to “gaps or overlaps and inconsistencies that create confusion about where things fall” between different regulators. However, for the Australian regulator, there will be no ambiguities: all ICOs will fall under ASIC’s remit which has “a very wide regulatory reach in terms of financial services generally.”
That regulatory reach will first be extended towards ICOs making overblown or fraudulent claims. ASIC has already intervened in an unnamed betting ICO due to “fundamental concerns” about growth forecasts which appeared “very optimistic.”
Founder optimism is now insufficient. ASIC reminds ICOs that they are subject to the 2001 Corporations Act, which contains a provision whereby “if you’re going to make a statement about a future matter, you have to have grounds, mere passionate personal belief isn’t enough.”
Last week ASIC released a revised version of Information Sheet 225 which provides guidelines to potential ICOs. They suggest companies “seek professional advice (including legal)” as ASIC itself is “not in a position to review a draft white paper and provide a view about the operation of Australian law.”