The Australia Securities and Investments Commission (ASIC) has reportedly released its answer for public consultation, focusing on crypto exchange-traded products (ETPs), with new sector guidance. 

Specifically, the regulator reportedly introduced a set of requirements in regulations focusing on funds having a target of providing crypto ETPs, including exchange-traded funds (ETFs) and structured solutions, after spending months for sector consultation, which was kickstarted in June. 

Per detailed in the official guidance, ASIC has so far granted the go-ahead for ETPs, dependent on large crypto coins, nominally Bitcoin (BTC) and Ether (ETH), with expectations for additional crypto assets to turn into a foundation for ETPs in the long run.

“As of October 2021, Bitcoin and Ether appear likely to satisfy all five factors identified above to determine appropriate underlying assets for an ETP. We expect the range of non-financial product crypto-assets that can satisfy these factors will expand over time.”

The guidance further claimed that so as to turn into an appropriate basis for a crypto ETF, it is advised for a virtual asset to acquire “a high level of institutional support, a mature spot market, a regulated futures market, reputable and experienced service providers and transparent pricing mechanisms”. 

For every crypto ETF product application, it is reportedly mandatory for regulated exchanges to conduct assessments regarding the capabilities of the issuing entity, to complete its duties associated with the offering, including offering safe and secure custody, together with securing related licenses.

“While we acknowledge concerns raised by respondents about overseas-based custody of crypto assets such as the potential for difficulties in recovering assets across jurisdictions, we consider it would be inappropriate to mandate a domestic custodian requirement”. 

Via an answer to public consultation, the ASIC additionally claimed that it does not make it compulsory for organizations offering crypto ETFs to have domestic crypto custody, acknowledging that restrictions of that kind would limit competition in an unfair manner.