SYDNEY (Reuters) - Australia’s corporate watchdog said on Tuesday it was cracking down on “misleading or deceptive conduct” in the marketing and selling of digital tokens via initial coin offerings.
The Australian Securities & Investments Commission (ASIC) said some companies have already halted their offerings or indicated a change in their ICO structure as a result of its inquiries.
ICOs are increasingly popular with start-ups as a way to finance projects. But regulators in several countries including China and South Korea are trying to rein in the global boom in trading bitcoin and other cryptocurrencies.
The ICO market is relatively small in Australia but ASIC is wary poor conduct will have a negative impact on investor confidence over time.
“If you are acting with someone else’s money, or selling something to someone, you have obligations,” ASIC Commissioner John Price said in a statement.
“Regardless of the structure of the ICO, there is one law that will always apply: you cannot make misleading or deceptive statements about the product,” he added.
“This is going to be a key focus for us as this sector develops.”
ASIC cited a recent example where it identified “fundamental concerns” with the structure of an ICO, the status of the offeror and the disclosure in its white paper.
It did not disclose the name of the company issuing the ICO nor the size of the offer.
Last week, Price told a gathering in Sydney that ASIC will look to update its guidance on companies considering ICOs. It will also highlight that Australian corporate and consumer law might apply no matter where the ICO is created and offered.
Reporting by Swati Pandey; Editing by Jacqueline Wong