Australia’s Cryptocurrency Sector Facing Increased Scrutiny

Australia’s financial watchdog has revealed plans to focus on crypto exchanges and ICOs.

The Australian cryptocurrency sector is facing increased scrutiny by the country’s financial regulator. In its corporate action plan for 2018–2022, released on Friday, the Australian Securities and Investments Commission (ASIC) said it would keep a close eye on domestic cryptocurrency exchanges and Initial Coin Offerings (ICO).

“We will continue to focus on monitoring threats of harm from emerging products (e.g. ICOs and crypto currencies), cyber resilience, the adequate management of technological solutions by firms and markets, and misconduct that is facilitated by or through digital and/or cyber-based mechanisms,” ASIC stated.

For 2018 and 2019, in particular, the regulator said it will be monitoring ICOs and “intervening where there is poor behavior and potential harm to consumers and investors.” ASIC added that its second area of focus in the period would be “developing our approach for applying the principles for regulating market infrastructure providers to crypto exchanges.”

Currently, cryptocurrency exchanges in Australia are required to comply with know-your-customer (KYC) and anti-money laundering (AML) standards enforced by the country's financial intelligence agency, the Australian Transactions and Reporting Analysis Center (AUSTRAC). However, there is still no pertinent regulation for crypto exchanges issued by the ASIC. The watchdog has only introduced a guide that should be followed by companies seeking to raise funds via ICOs.

The ASIC’s corporate action plan comes in the same week that Australian technology solutions provider Byte Power Group (BPG) responded to multiple enquiries from the Australian Securities Exchange (ASX) over its plan to raise $15 million via an initial coin offering (ICO) for the launch of a cryptocurrency exchange.

Among the regulator’s concerns were the compliance of the fundraising with ASX listing rules and the legal backing of the project. Based on legal advice it had obtained, BPG insisted it met the various requirements to proceed with its token sale.