ASIC to require crypto firms to get licenses
The Australian Securities and Investments Commission (ASIC) today released information for product issuers and market operators on how they can meet their regulatory obligations in relation to crypto-asset exchange traded products (ETPs) and other investment products.
The information covers good practices for market operators in how they admit and supervise these products, and good practices for product issuers in how they establish and operate these products. Key matters covered by ASIC’s good-practice guide include admission and monitoring standards, custody of crypto-assets, pricing methodologies, disclosure and risk management.
Responsible entities that intend to hold underlying assets that comprise crypto-assets will need to hold an authorisation in relation to crypto-assets. ASIC has introduced a new ‘crypto-asset’ category in the licensing application for responsible entities.
- For firms that are giving advice, dealing, providing insurance, or providing other intermediary services for crypto-assets that are financial products a range of Australian laws apply, including the requirement to hold an AFS licence.
- For firms that are operating a market for crypto-assets that are financial products, a range of Australian laws apply, including the requirement to hold an Australian market licence.
- If the payment service provided by a firm involves a ‘non-cash payment facility’ a range of Australian laws apply, including the requirement to hold an AFS licence.
The good practices and licensing changes follow ASIC’s public consultation in Consultation Paper 343 Crypto-assets as underlying assets for ETPs and other investment products (CP 343) in June 2021. In CP 343, ASIC consulted on proposals to establish good practices for these products within the existing regulatory regime and changes to its licencing regime.
ASIC received 32 non-confidential submissions in response to CP 343. Most of the submissions received were generally supportive of ASIC’s proposals in CP 343.
ASIC also notes the Senate Select Committee on Australia as a Technology and Financial Centre released its Final Report on 20 October 2021, with recommendations on developing an Australian regulatory framework for crypto-assets. ASIC has made submissions to the Select Committee and will work with Treasury and Government as they consider the recommendations in the Final Report.