Financially fragile profile – The Australian regulator blocks three crypto funds to protect retail investors who might be tempted to invest in these volatile and speculative products.
Australian Bitcoin, Ether, and Filecoin funds shut down
In an October 17 statement, the Australian Securities and Investments Commission (ASIC) advised of the issuance of temporary arrest ordersagainst funds linked to Bitcoin (BTC), Ether (ETH), and Filecoin (FIL), from Australian asset manager Holon.
Pending the lifting of the restrictions, the company will not be able to offer these products to retail investors, or even provide them with advice on investing in these funds.
An inadequate product for retail investors
ASIC justifies its decision by evoking a non-conformity in the Determination of target markets (DTM) that Holon provided. The DTM is a document that describes, among other things, the appropriate markets for a financial product, taking into account their needs, objectives, and financial situation.
The regulator wants to protect retail investors, to whom these crypto funds are also addressed, who would be very “ volatile and complex and would therefore not necessarily be suited to the profile of this market segment.
In its press release, ASIC recalls Holon’s statements that the assets that make up these funds may lose all of their value.
Three weeks to take corrective action
The orders that the regulator has taken against these crypto funds, have a duration of 21 day validity. However, they could be revoked ahead of schedule, and may turn into final stop orders if Holon ignores ASIC’s concerns.
The regulator has not explicitly mentioned the changes it expects, but Holon will therefore have to take specific measures regarding the management of risks for retail investors, concerning its crypto funds.
ASIC has certainly accepted the marketing of three ETFs linked to Bitcoin and Ether, but the Australian regulator remains cautious about the idea of opening up crypto funds to the mass, to individual investors. vulnerable financial institutions, who would have limited knowledge of crypto products and a relatively smaller financial surface.
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