ASIC confirms having “mixed experience” with ICOs and token generation events

Maria Nikolova

Commissioner John Price says that in several cases where ASIC has seen ICOs operating in breach of Australian law, the regulator has taken further action resulting in many operators stopping their ICOs.

In the face of the overall supportive stance that the Australian Securities & Investments Commission (ASIC) has adopted regarding financial innovation, the regulator has admitted that some areas have triggered mixed responses on its part.

In a speech delivered at the Monash Centre For Commercial Law and Regulatory Studies Symposium, (Melbourne, Australia) on November 12, 2018, ASIC Commissioner John Price, confirmed that the Australian regulator had some “mixed experience” with the crypto-asset sector this year.

“We have had some mixed experience during 2018 with initial coin offerings and token generation events, and have sent out clear messages that ASIC will not tolerate misleading or deceptive conduct”, John Price said.

Let’s note that ASIC has a dedicated section on digital transformation on its website. The information there explains that where a token offered through an ICO is a financial product, additional laws may apply above and beyond the prohibitions on misleading conduct. ASIC also explains that the legal status of an ICO is dependent on the circumstances of the ICO, such as how it is structured and operated as well as the rights attached to the token.

John Price also highlighted that, regardless of the structure, there is a law that will always apply – that misleading or deceptive statements about a product are not allowed.

“This is a key focus for us and Australian law prohibiting misleading or deceptive conduct will apply in this space, regardless of whether there is a financial product involved”, John Price said.

In line with statements made earlier this year, Commissioner Price stressed that Australian corporate and consumer law might apply even if the ICO is created and offered from overseas.

He added that in several cases where ASIC has seen ICOs operating in breach of the Australian legal requirements, the regulator has contacted the relevant entities and taken further action resulting in many operators stopping their ICO or proposing alternative structures.

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