Australia’s Financial Regulator Places Interim Stop Orders On Three Funds Tracking BTC, ETH, and FLC

  • Australia’s top financial regulator temporarily suspends Holon Investments’ Bitcoin, Ethereum and Filecoin funds.
  • The suspension is due to non-compliance with the required standards in filing its target market determinations. 
  • The improved cryptocurrency regulation comes as the financial watchdog expanded its team and jurisdiction last month.

As Australia’s crypto regulation tightens, virtual asset management firm Holon Investments comes in the crosshairs of the Australian Securities and Investments Commission (ASIC).

ASIC has placed temporary stop orders on Holon Investments Australia Limited cryptocurrency-related funds about to be offered to its retail investors. The regulatory body in its announcement on Monday, cited a regulatory breach with the company’s target market determination (TMD) filings. 

A TMD is a document describing the potential customers of a financial product and any associated risk in investing in the product. Holon Investment filed a TMD with the Commission for funds that invest in Bitcoin (BTC), Ethereum (ETH), and Filecoin (FLC), which has been described as being too broad and speculative. 

In the TMD, Holon Investment stated that its target market includes investors that possess a “medium, high, or very high risk and return profile and those looking to use the fund for 75% to 100% of their investment portfolio.” ASIC expressed concerns with the disclosures made by the company highlighting that with the risk of investing in digital assets, potential investors in the funds could face a “total loss of value.” 

The funds, which include BTC, ETH, and FLC, have been temporarily suspended for 21 days, with the Commission expecting the company to comply with the regulations of a TMD as soon as possible to avoid stricter sanctions. This initial suspension prevents the company from seeking new investors for the funds, general advice, or issuing shares of the funds to investors. 

Australia’s crypto regulations to get tougher 

With the growth of digital assets in Australia, ASIC has set out to increase its supervision of the industry. Research by SEC Newgate in Australia shows that 44% of the country’s retail investors own virtual assets and 20% view them as risky assets. To effectively check the cryptocurrency market, the watchdog has increased its team to regulate the sector with digital assets, now one of its “core strategic projects. 

Like the United States SEC, ASIC is also reviewing the status of ETH, considering whether it is a security in the aftermath of the Ethereum Merge and other Proof-of-Stake (PoS) assets. This year, the Commission expressed its concerns about the exposure of digital asset investors, highlighting that these assets are “heavily advertised and promoted” with the possibility of investors not knowing the whole risk. 

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