With the rise in cryptocurrency such as the world famous Bitcoin and Ethereum , there is naturally a rise in the issue of initial coin offering (“ICO”) for the purpose of raising funds for Blockchain and Fintech projects.
This has resulted to potential issues identified by regulators across the world such as
- Lack of investor protection or customer protections
- Fraud risk
- High price volatility (Halvings.com has witness this on a daily basis)
There are now a number of Jurisdictions around the world that is adopting a case by case observation below is Australia’s take on ICO:
- Australian Securities and Investments Commission (ASIC) issued Guidance relating to the legal status of Initial Coin Offerings (ICO) confirming that it is dependent on how the ICO is structured, operated and the rights which the cryptocurrency offer to the investor.
- Cryptocurrency when structure is considered to offering or rights to investor may be a managed investment scheme, derivative or even a share.