The Australian Securities and Investments Commission (ASIC) launched a public consultation today (Monday) regarding the extension of regulatory relief for business introduction services, with the current measures set to expire on April 1, 2025.
ASIC Reviews Relief Extension for Investment Matchmakers
The regulatory body is evaluating whether to extend relief measures for managed investment schemes while also considering the reinstatement of previous exemptions for securities under Chapter 6D of the Corporations Act 2001.
The existing relief, provided under ASIC Corporations Instrument 2022/805, offers conditional exemptions from various regulatory requirements, including fundraising, financial product disclosure, and advertising restrictions.
However, trading service providers must maintain their AFS licenses regardless of any relief granted, as the instrument doesn’t exempt firms from licensing requirements.
“We expect that persons who provide business introduction services will consider whether they will be providing financial services to their clients and, therefore, need to hold an AFS license,” ASIC commented.
Since October 2022, ASIC has observed minimal utilization of the current instrument for registered managed investment schemes. This low adoption rate has prompted the regulator to reassess the relief’s necessity and effectiveness in the current market environment.
The consultation specifically seeks input on whether the crowd-sourced funding (CSF) regime adequately serves small- to medium-scale capital-raising needs. Market participants are being asked to provide detailed justification if they believe the previous securities relief should be reinstated.
Industry stakeholders have until February 5, 2025, to submit their feedback, with ASIC emphasizing the importance of detailed explanations supporting any calls for relief reinstatement. The regulator has indicated that submissions can be made anonymously, though this may limit follow-up discussions.
ASIC Had a Highly Active Month
The market watchdog has had a busy month, highlighted by the release of a new consultation paper, which follows December’s document addressing cryptocurrency regulations and seeking feedback from industry stakeholders.
In the latest consultation paper, ASIC provides 13 examples of products, including crypto wallets and meme tokens, to demonstrate how existing financial product definitions might apply to crypto businesses.
During this period, ASIC also released updated guidelines for financial services firms holding client assets. These updates introduce new requirements for cryptocurrency custody and enhance oversight of asset holders. This marks the first major update since June 2022, expanding the scope of asset-holding requirements to address emerging risks associated with digital assets while reinforcing traditional custody standards.
Additionally, the regulator took legal action against several firms. Australia’s financial watchdog launched proceedings against HSBC Bank Australia Limited, alleging that the bank failed to protect customers from scams, leading to millions of dollars in losses.
Moreover, ASIC initiated legal action against Binance Australia Derivatives, accusing the subsidiary of the world’s largest cryptocurrency exchange of misclassifying over 500 retail investors as wholesale clients. This alleged misclassification, which reportedly affected 83% of Binance Australia’s client base between July 2022 and April 2023, exposed these clients to high-risk crypto derivative products without proper safeguards or consumer protections.
This article was written by Damian Chmiel at www.financemagnates.com.RegulationRead More
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