The move comes as governments and regulators worldwide try
to regulate the digital assets industry in the wake of rising investor affinity
for cryptocurrencies, which are volatile and risky for users and financial
institutions.
Bitcoin, the most popular cryptocurrency, has seen its price
swing wildly this year, trading over the $35,500 level on Wednesday after
hitting an all-time high of just under $65,000 in mid-April.
The Australian Securities and Investments Commission (ASIC)
sees a "real risk of harm to consumers and markets" if
exchange-traded products (ETPs) and other instruments exposed to crypto-backed
assets are not developed and regulated properly.
The regulator is proposing https://asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-153mr-asic-consults-on-crypto-asset-based-etps-and-other-investment-products
to establish good practices with regard to the pricing, ownership, risk
management and disclosure of these instruments to protect retail investors and
maintain fair market practices.
"Market operators and product issuers need to be
mindful of meeting their existing regulatory obligations when creating,
operating and allowing such products," ASIC Commissioner Cathie Armour
said.
The proposals consider these assets as financial instruments
under the Australian corporations law, and hence they fall under the purview of
the ASIC for regulation.
The regulator will issue a feedback report and publish
information on good practices following consultation on the proposals, it said.