ASIC unveils softly, softly approach as it tries to apply financial laws to booming crypto-currency sector

The Australian Securities and Investments Commission plans a softly, softly approach as it tightens regulation of cryptocurrency products and players. The Federal corporate watchdog is seeking public comments on draft guidelines for increasingly applying Australia’s financial services regime to blockchain-linked products, digital asset businesses, brokers and intermediaries. But ASIC is dangling a carrot in front of businesses that should have a financial services licence but have not yet got one. In an explanatory note to be released on Wednesday, ASIC says it is considering a broad “no-action” stand against firms providing digital asset services and who are “actively and in good faith applying for one or more licences from ASIC”. ASIC says it is an operator’s responsibility to determine whether its digital asset offerings are financial products. “We consider that many digital assets — whether alone or in combination with other products or services — are financial products,” ASIC says. ASIC commissioner Alan Kirkland said it wished to “promote the growth of responsible financial innovation while ensuring consumer protection”. “Stakeholders have been calling for greater clarity and, in response, we are releasing our draft updated guidance,” he said. With 360 digital currency exchanges now registered with AUSTRAC, regulators have been grappling with whether various crypto-related funds and derivatives should be policed by ASIC. ASIC will suggest that crypto-related assets sold by promoters as wrapped tokens and stablecoins are financial products. Wrapped tokens tend to have a value linked to the price of a cryptocurrency, while stablecoins can be linked to a real currency, market-traded commodity or a crypto asset. Treasurer Jim Chalmers said ASIC’s draft guidelines were another important step in developing a regulatory framework for the crypto industry and digital assets. “Getting the balance right on the regulation of digital assets is part of building a dynamic and competitive economy,” Mr Chalmers said. “We’re closely watching developments around the world.”