The legal status of an initial coin offering will be largely dependent on the rights attached to the tokens under Australian securities law, the Securities and Investments Commission has confirmed.
In its review of ICOs, the regulator said that the legality of an ICO is dependent on the individual circumstances such as “how the ICO is structured and operated, and the rights attached to the coin (or token) offered through the ICO.”
In the case of an investment fund, ASIC will assess what rights, if any, are attached to the coins being issued, as the “key consideration” in establishing the legal status of an ICO.
If the value of a coin is related to the management of something that meets Australian law’s investment fund criteria, the ICO issuer will be deemed to be offering an investment fund. The rules on disclosure, registration and licensing would then would apply under the Corporations Act.
The guidance follows similar moves from securities regulators in the UK, US and Canada.
In September, China and South Korea banned cryptocurrency trading completely, with China ordering any transactions made to be reversed.