Australian regulators are turning their attention to the prospect of retail investment funds holding cryptoassets — an idea that Canadian regulators have been among the first to embrace.
The Australian Securities and Investments Commission (ASIC) published a consultation paper on exchange-traded products (ETPs) and other investment vehicles that provide retail investors with exposure to cryptoassets.
“Cryptoasset ETPs have attracted significant attention globally, particularly with the launch of bitcoin-based ETFs on the Toronto Stock Exchange,” it said.
The ASIC noted demand for similar products in Australia but said it’s concerned about “the real risk of harm to consumers and markets if these products are not developed and operated properly.”
Among other things, the paper said a key issue for regulators is whether crypto-based investments can meet the requirements for conventional funds, including whether cryptoassets are suitable as underlying portfolio assets, whether cryptoassets can be reliably priced, and how they should be classified under existing rules.
The paper also considered issues related to custody, risk management and disclosure, noting that crypto investment funds have “novel and unique” features and risks that need to be addressed by issuers and industry firms.
Many of these same issues are actively being considered by Canadian and U.S. regulators, it noted.
“Market operators and product issuers need to be mindful of meeting their existing regulatory obligations when creating, operating and allowing such products, so they can be facilitated in a way that maintains investor protections,” said ASIC commissioner, Cathie Armour, in a release.
The deadline for responses to the consultation is July 27.
The ASIC aims to publish its final recommendations in the third quarter.