In an interview, ASIC Chairman Greg Medcraft has discussed the regulator’s approach to initial coin offers (ICO), noting that the regulator is still considering its position in relation to regulation of these products. The Chairman discussed the features of ICO tokens, noting that they were unlikely to be equities:
"They’re a very interesting concept. An ICO is not equity – you're offering basically something that is the product of the entity that is doing the launch. You're taking a bet on getting that product early. How different is that if I go to Kickstarter and I buy something – a watch – and then I get that watch and sell it in the future? It's no different, is it?”
The Chairman noted that the regulator’s current approach to cryptocurrencies was that they were commodities (not currencies) and therefore were not financial products. However, ICO tokens could be securities:
"To be classified as a security it would have to have some sort of financial conditions attached to it. Financial obligations have to be offered in relation to it, either it's equity or it's a debt-like instrument or principal instrument or a derivative on that."
While the Chairman noted that ICO tokens in other jurisdictions had been considered by regulators to be outside the realm of regulated financial products, it was possible that certain ICO tokens would bear sufficient similarity to securities to fall within ASIC’s mandate. In the event that ICO tokens were within ASIC’s mandate, the Chairman noted that:
“If [ICOs] do come within our mandate, we would essentially take a technology neutral approach and say, 'Alright, how can we get comfortable about the disclosure of the party issuing the coins? Have the risks been properly disclosed that are related to it? Are there particular conflicts of interests by the issuer?”
The Chairman also noted that a cryptocurrency backed by a central bank would be of significant utility in addressing money laundering and the black economy. The implementation of a payments channel within a centralised DLT scheme would remove issues of anonymity that can arise from current cryptocurrency offerings (such as Bitcoin).