The Treasury of the Australian Government launched a public consultation on the initial coin offering (ICO) marketplace in January and the process closes today (February 28th).
The consultation is part of a broader policy initiative to foster innovation in the financial services industry. Like much of the rest of the world, Fintech is emerging as strategically important.
The Treasury notes that ICOs have some similarity to IPOs, venture capital, and crowdfunding but there are some distinct differences too. ICOs have tended to be borderless, if less so now that regulators have taken a greater interest in the new process of online capital formation. The consultation is aware that a number of jurisdictions are “actively competing to attract ICO activity and establish themselves as a hub for innovative technology companies that favour ICO fundraising.”
The consultation, while recognizing the innovation, seeks to highlight both the risks and opportunities to these digital asset offerings.
“An ICO is essentially a means of crowdfunding a project that relies on DLT.”
Some of the key questions asked by the Australian consultation include:
- What is the best way to define an ICO and are there different categories of tokens?
- What is the importance of secondary trading in the ICO market?
- Can ICOs contribute to innovation?
- And how important are ICOs to Fintech and other economic opportunities?
- What are the risks for policymakers, regulators and investors?
- When does an ICO fall under existing financial services law and when does it (or should it) not?
- And what about the tax treatment of crypto?
The consultation asks many good questions which are similar in nature to what many policymakers have been asking themselves around the globe.
This will be a good consultation to watch.
See the ICO document embedded below.
ICOs Issue Paper Australia The Treasury