The information sheet, titled INFO 255, outlines and defines different types of initial coin offerings (ICO) as well as the varying legal statuses of ICOs depending on structure and operation.
Commenting on the release of the guide, ASIC commissioner John Price said in a statement, “We want to ensure innovative firms understand the regulatory framework they may be operating under and ensure they meet any obligations they may have when raising funds in Australia.”
Government bodies ASIC and the ACCC jointly cautioned against the risks involved when investing in ICOs.
“ICOs are highly speculative investments, are mostly unregulated and the chance of losing your investment is high,” Mr Price said.
“Consumers should understand the risks involved, including the potential for these products to be scams, before investing.”
An ICO, also known as an initial token offering, is defined in the information sheet as “a new form of funding used by a business or an individual to raise funds from various types of investors through the internet”.
The document also clarified the different categories of ICOs, such as when an ICO was a managed investment scheme, an offer of shares, an offer of a derivative, or an offer of a non-cash payment facility.
Distinguishing between an ICO and an initial public offer (IPO), the document stated that “though an ICO may appear to be similar to an IPO, the CO may not offer the same protections”.
“Where a prospectus for an IPO does not contain all the required information, or includes misleading or deceptive statements, investors may be able to withdraw their investment before the shares are issued," it said.
“No such protection exists for ICOs made without a prospectus.”
If an ICO was found to be a financial product, the operator of the platform upon which the ‘coin’ was traded would need an Australian market licence unless an exemption applied.
Additionally, crowdfunding using ICOs was not the same as “crowd-sourced funding” (CSF), which was subject to new laws effective 29 September 2017.
“Care should be taken to ensure the public is not misled about the application of the CSF laws to an ICO,” the document said.
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