AUSTRAC, ATO and ASIC DISCUSS THEIR REGULATORY VIEWS ON ICO’S

By Jim Bulling and Felix Charlesworth

On 16 April 2018, representatives from the Australian Securities and Investments Commission (ASIC), Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Tax Office (ATO) convened in Melbourne and delivered presentations outlining their regulatory views on Initial Coin Offerings (ICOs) and blockchain technology in general.

In the first presentation, John Price reaffirmed ASIC’s position set out in Information Sheet 225 and stated that their advice for prospective issuers of tokens/ coins going forward would be to make certain that regardless of the structure of a proposed ICO, those involved must ensure that they do not make statements in any marketing or disclosure documents (such as Whitepapers) that are misleading or deceptive. Mr. Price also noted that an updated version of Information Sheet 225 should be available soon.

The representative from AUSTRAC presented on the new amendments to the AML/CTF Act. In particular, detail was provided as to the main reporting obligations of cryptocurrency exchanges under the AML/CTF Act. The representative also stated the deadlines for compliance under this new regime which would include a “facilitative compliance period”.

Finally, the representatives from the ATO presented their views as to the taxation treatment of cryptocurrencies and ICO’s in Australia. The first presentation stressed that the existing Australian taxation framework continues to be applicable to the sale of cryptocurrencies in terms of assessable income or capital gains tax. The second presentation looked at how the proceeds of an ICO will be treated for taxation purposes in Australia. It was noted that proceeds may be treated as income depending on:

• what is actually offered and what does the coin/ token actually do?

• what are the underlying assets/ services associated with the token?

• what other rights/ obligations do the tokens provide investors with?

A video of the presentation is available with the following link.