Development of Virtual Currency and ICOs in Australia

Chapter 4 examines the development of cryptocurrency in the Australian context with special reference to regulatory response by the Australian legislator to the new developments in the digital-finance world. However, since cryptocurrencies have no national or geographical boundaries, it is essential that our discussion should not only confine to Australia. Hence, we place our discussion in the international context, while focusing more on the regulatory developments in the Australian context. The varying characteristics of crypto currencies, tokens, and Initial Coin Offerings (ICOs) make the legal nature of such very difficult to assess. The Australian Securities and Investment Commission (ASIC) takes a broader approach and seeks into the fact whether a token falls within the definition of a financial product, with the term “security” with primarily referring to shares and debentures in Australia. Jurisdictions elsewhere take various approaches to regulate cryptocurrencies and associated entities. Countries such as China and South Korea have announced outright bans on ICOs. whereas other countries such as United States have issued regulatory warnings. This discussion does not intend to cover all aspects pertaining to cryptocurrencies, yet looks into some resent developments and how the Australian legislator is responding to the ever changing scenario.