Australia’s chief financial market regulator has made a valuable decision due to non-compliant target market designations (TMDs). It has ordered indefinite suspension of three funds related to the cryptocurrency offered to individual investors. Here are the details…
ASIC halts cryptocurrency funds
The Australian Securities and Investments Board (ASIC) featured cryptocurrencies in an October 17 press release. He said that Australian asset manager Holon has ordered a permanent halt to three other crypto funds that aim to invest in different Bitcoin (BTC), Ethereum (ETH) and Filecoin (FIL). Purpose is a document describing who a work is suitable for based on market determination, possible requirements, objectives and financial situation, as well as how the work can be distributed.
A spokesperson for ASIC said TMDs are “very broad given the volatility and speculative nature of the crypto markets.” They also cited the regulator’s concern that Holon “did not properly assess the characteristics and risks of the funds when identifying their target markets.” In a statement on the matter, ASIC said that it is evaluating those who are considering using “satellite component” funds that are not suitable for the broad-purpose market defined in the TMDs, including those with a medium, high or very high risk and return profile. The satellite component is attributed to those considering up to 25 percent of their portfolio to use the fund for 75 percent to 100 percent of their investment portfolios.
What does ASIC want from the asset manager?
ASIC added that crypto funds can expose investors to significant negative returns. But he noted that the work disclosure statements (PDS) provided by Holon said they could face “total loss of value.” He added that the discontinuous order will be valid for 21 days unless canceled beforehand.
The details of what ASIC is asking Holon to change are unknown. But the regulator said it expects Holon to consider the fuss and take immediate steps to ensure compliance. The discontinuous mandate will prevent Holon from sharing a PDS, providing general advice on funds, or issuing shares of funds to individual investors.
The Adjuster also expects Holon to handle the flurry “on time” or a final stop order will be issued. But Holon will be given the opportunity to make a presentation before such an order is given. The funds, called Holon Bitcoin Fund, Holon Ethereum Fund, and Holon FileCoin Fund, are all managed investment schemes that aim for exposure to the price of the respective crypto and accumulate money by investors who receive a relative stake in the system in return.