ASIC Issues Regulatory Guidance on Crypto Products

The Australian financial markets regulator has issued guidelines and requirements on Friday for the launch of crypto exchange-traded products (ETPs) and other investment products that could result in the listing of cryptocurrency instruments on the country’s stock exchanges in the coming months.

The regulator has added a new ‘crypto-asset’ category on its licensing application that will give legitimacy to the cryptocurrency service providers.

The guidelines did not come as a surprise as the Australian Securities and Investments Commission (ASIC) was consulting on the same since June. It came after a growing interest among Australian market participants for the launch of such crypto products.

“Crypto-assets have unique characteristics and risks that must be considered by product issuers and market operators in meeting their existing regulatory obligations,” said ASIC Commissioner Cathie Armour.

Good Market Practices

The new guidelines primarily give instructions on admission and monitoring standards, custody of crypto-assets, pricing methodologies, disclosure, and risk management. All of these requirements are covered under market good practices.

The regulator further stressed the requirements of cryptocurrency custody and said that the best way to store private keys is by keeping them on cold storage, meaning in wallets that are not connected to the internet. The companies also need to make numerous backups and store them in separate geographical locations.

Armour added: “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.”

ASIC’s present criteria fit only Bitcoin and Ethereum. But, the agency is expecting that the number of cryptocurrencies fitting its criteria will increase over time.

Earlier, the Australian regulator also issued a warning against the unlicensed cryptocurrency exchanges that offer services to Australians, counting the risks of investing crypto futures and options on offshore platforms.

   
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