The regulatory body of Australia, ASIC is working on a taskforce to crackdown on the misleading and deceptive ICOs and to regulate the ICO market in general.
An internal taskforce to police the ICOs
The Australian Securities and Investments Commission (ASIC) has established an internal taskforce to control the popular growing crowdfunding method Initial Coin Offerings (ICOs). Now, the startups that use this method are put on notice by the regulatory body under the delegated powers from the Australian Competition and Consumer Commission to take an action under the consumer law.
According to a local media source, ASIC commissioner John Price shares the importance of the country in this scenario:
“Australia is pretty unique for a few reasons. ASIC has a very wide regulatory reach in terms of financial services generally and that’s quite unusual internationally.”
He further adds:
“ICOs can be structured as many types of financial or non-financial products … I think there can be gaps or overlaps and inconsistencies that create confusion about where things fall [when there is more than one regulator], but in Australia, it’s clear.”
ASIC is primarily focused on those ICOs that are misleading and involved in deceptive conduct. The agency has already taken action against one such ICO that remains unnamed but involves fundamental concerns about its business growth forecasts that apparently seemed way too optimistic.
Misleading & deceptive ICOs are the primary concern
Having concerns about ICO’s structure, ASIC says it could have been a managed investment scheme but the agency hasn’t been approached for the license.
“The fundamental rule here is you can’t just make pie in the sky claims, you need something to back it up. There’s a provision in the corporations’ act where 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, the country’s corporate regulator announced the crackdown on misleading ICOs mentioned that
“these offers can involve significant risks for investors that are often not disclosed or well understood.”
Giving four instances of this conduct, the commissioner mentioned, using social media to show greater level of public interest in an ICO, not disclosing adequate info about the ICO, suggesting that the ICO is a registered product when this is not the case, and creating a group to generate an appearance of a greater level of buying and selling activity.
The inquiries issued by ASIC to the issuers of ICO and their advisors look into the statements and conduct that are either deceptive or misleading. The agency is also looking for “potentially unlicensed conduct” that has resulted in the halt and structural modification of several of ICOs.
How do you think this crackdown affects the crypto industry of Australia? Share your thoughts with us in the comment section below!