The Australian Securities & Investments Commission (ASIC) released regulatory guidance on initial coin offerings on September 28, aiming to help businesses determine whether their token sale activities fall within the scope of the Corporations Act and what legal obligations may apply.
Rather than adopting a blanket approach, ASIC said the legal treatment of an ICO depends on the nature of the offering, the way it is structured and operated, and the rights attached to the token. In other words, an offering is not regulated based on the ICO label alone, but on its actual economic and legal characteristics.
Tokens may qualify as shares, managed investment schemes, or derivatives
ASIC said that where an ICO is used to fund a company and the white paper suggests rights linked to ownership, voting, or profit participation, the token may fall within the definition of a share. In that case, the issuer may be required to prepare a prospectus, bringing the offering closer to the standards expected in traditional capital markets. The regulator also noted that investors do not receive the same protections when ICOs are conducted without a prospectus.
The guidance also addresses managed investment schemes (MIS). If participants contribute assets, those assets are pooled, contributors lack day-to-day control, and the value of the digital coins depends on the pooled funds or their use, the ICO may be captured by MIS rules and related compliance requirements.
On derivatives, ASIC referred to section 761D of the Corporations Act and cited options and futures as examples. It further indicated that certain smart contract arrangements could be subject to derivatives licensing laws, signaling that blockchain-based financial structures may still fall squarely within existing regulation.
ICO crowdfunding is not the same as regulated CSF
While acknowledging that ICOs may expand fundraising options for businesses and investment opportunities for the public, ASIC stressed that offerings must be conducted in a way that promotes investor trust and confidence and complies with applicable law. It specifically warned that ICO-based crowdfunding is not the same as Australia’s statutory crowd-sourced funding framework, which came under the Corporations Act from September 29, 2017. Businesses should not mislead the public into believing ICOs automatically benefit from that regime.
Industry participants welcome the clarity
The guidance was broadly welcomed by parts of Australia’s fintech and blockchain sectors. FinTech Australia CEO Danielle Szetho described it as a positive step toward ensuring a viable future for ICOs in the country. ICOPromo CEO Sergei Sergienko similarly said ASIC had taken a calm and measured approach that offers useful direction to interested parties.
Overall, ASIC’s position does not reject ICOs outright. Instead, it seeks to fit token offerings into existing legal categories based on the rights and structures involved. That approach preserves room for innovation while making clear that token sales resembling securities, pooled investment products, or derivatives will not sit outside traditional financial oversight.