ASIC Puts Crypto in Its 2023 Enforcement Priorities

The Australian Securities and Investments Commission (ASIC) has announced its enforcement priorities for 2023, highlighting its focus on investor harm involving crypto-assets.

Other areas the regulatory enforcement team will prioritize are sustainable finance practices and disclosure of climate risks, financial scams, and cyber and operational resilience.

ASIC Prioritizes Crypto

"We take our role to protect consumers and investors seriously and won't hesitate to take action to protect consumers where we identify poor conduct," said Sarah Court, the Deputy Chair at the Australian financial market watchdog. "We will also remain focused on helping [the] industry to meet their legal obligations including by providing simple, effective, and easy-to-access guidance."

The fresh priorities came after the Aussie regulator revealed several other focus areas in its four-year plan between 2022 and 2026, which it released last August. It then highlighted the priorities around the design and distribution of products and technology risks, but not cryptocurrencies.

However, the regulator updated the priorities with increasing violations in the financial services industry, especially with cryptocurrencies.

ASIC laid out 173 criminal charges between July and December last year, resulting in the imposition of AU$ 76.3 million in civil penalties by the courts. It also commenced 62 investigations, with another 103 investigations ongoing. On top of that, the regulator laid 312 criminal charges for the whole year and imposed AU$ 222.1 million in civil penalties.

"In the final three months of last year, we commenced a number of significant enforcement and regulatory actions to address misconduct, market integrity threats and consumer harms in sectors including financial services, retail and crypto-assets," Court added. "This includes corporate governance and directors' duties, product design and distribution, and misleading statements involving sustainable finance practices."

ASIC's Enforcement Action against Crypto Firms

ASIC's priority for cryptocurrencies was also revealed with multiple enforcement actions in the industry last year. It cited target market determinations violations in imposing an interim stop order against Holon Investments, preventing the firm from offering or distributing three cryptocurrency funds (Holon Bitcoin Fund, Holon Ethereum Fund, and Holon Filecoin Fund) to retail investors.

Moreover, the regulator initiated civil penalty proceedings against Web3 Ventures Pty Ltd, operating under its tradename Block Earner. It alleged that the fintech company provided unlicensed financial services with its cryptocurrency offerings and used an unregistered managed investment scheme. That's not all, as the regulator sued BPS Financial seeking civil penalties for allegedly making false representations involving Qoin, a crypto asset token, when marketing. The company allegedly engages in unlicensed conduct to a non-cash payment facility for cryptocurrency.

Furthermore, the Aussie regulator was a frontrunner after the FTX collapse, as it was among the first to suspend the local license for the local subsidiary of the tainted cryptocurrency exchange.