The ASIC (the Australian Securities and Investment Commission) which has been given the job to regulate Australian organizations, financial markets and services, and finance sector professionals, in its submission declares that digital currencies themselves do not fit within the current legal definitions of a ‘financial product’ i.e. they are not financial products.
The view from the government agency could have several implications; one of them is that a person does not need an Australian market license to operate a digital currency trading platform, or an Australian financial services license in order to trade in digital currency. Also, a person won’t need a license to hold a digital currency for another person.
The view point from the ASIC also means that there won’t be any requirement for license to provide advice in relation to digital currency; and arrange for others to buy and sell digital currency. The agency believes that contracts for the sale and purchase of digital currencies are typically settled immediately, and as a result are unlikely to be financial products or derivatives.
In its submission to Australian Senate inquiry into digital currency the agency says, “However, if there is a delay between the entry of the agreement to sell and the delivery of the digital currency, the contract may be a derivative and the financial services and financial markets regimes would apply in the normal way.”
Digital currencies will not become financial products under the Corporations Act
Nonetheless, the ASIC showed its commitment and said that it has determined that some facilities developed to enable the use of a digital currency to make payments may be a financial product regulated by the commission. It says that treating digital currencies in a similar manner to national currencies may not result in a significant change to how digital currencies are regulated under the Corporations Act.
Also, the ASIC believes that digital currencies will not become financial products under the Corporations Act only by virtue of being treated as ‘currency’. Earlier in the last month chairman of the Australian Digital Currency Commerce Association Ronald Tucker had told a Senate Committee hearing that the ATO’s stance on Bitcoin did not make sense.
He had then admitted that it could result in driving the digital currency businesses that are emerging in the sector offshore and potentially underground.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org