Australia’s financial regulator is taking a hardline stance to protect initial coin offering (ICO) investors.
The Australian Securities and Investments Commission (ASIC) is tightening its reins and has plans to shut down ICOs that are “misleading or deceptive.” The ASIC has been working towards protecting investors in the highly unregulated ICO market. To date, the Aussie regulator has successfully shut down five ICO projects from raising capital because they lacked protective measures for investors. These ICOs are currently on hold status until they’ve restructured and are able to meet ASIC’s requirements.
In a statement, ASIC Commissioner John Price said, “If you raise money from the public, you have important legal obligations. It is the legal substance of your offer – not what it is called – that matters. You should not simply assume that using an ICO structure allows you to ignore key protections there for the investing public and you should always ensure disclosure about your offer is complete and accurate.”
The commission has identified “consistent problems” with token-generated events: the use of misleading or deceptive statements in sales and marketing materials; operating an illegal unregistered managed investment scheme (MIS); and not holding an Australian financial services license.
ASIC has already pointed out several issues of concerns in ICOs in the past and issued a guideline in 2017 to ensure investors security. The guideline also reminded ICO projects of their responsibilities before they issue tokens, as well as warned investors in the country against getting involved in “highly speculative investments” like ICOs.
According to ASIC Commissioner John Price, part of the problem was the fact that some ICOs assumed that the fundraising structure excluded them from being regulated and complying with existing consumer protection laws.
ASIC is focused on consumer protection in both the crypto and non-crypto space. The corporate regulator published a review on Tuesday where it disclosed that big banks took more than five years to repay customers for misconduct such as administrative errors. The report also disclosed that these banks fail to investigate and report on their mistakes and misconduct to the regulatory body.
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