The
Australian Securities and Investments Commission (ASIC) launched a public
consultation today (Monday) regarding the extension of regulatory relief for
business introduction services, with the current measures set to expire on
April 1, 2025.

ASIC Reviews Relief
Extension for Investment Matchmakers

The
regulatory body is evaluating whether to extend relief measures for managed
investment schemes while also considering the reinstatement of previous
exemptions for securities under Chapter 6D of the Corporations Act 2001.

The
existing relief, provided under ASIC Corporations Instrument 2022/805, offers
conditional exemptions from various regulatory requirements, including
fundraising, financial product disclosure, and advertising restrictions.

However, trading
service providers must maintain their AFS licenses regardless of any relief
granted, as the instrument doesn’t exempt firms from licensing requirements.

“We expect
that persons who provide business introduction services will consider whether
they will be providing financial services to their clients and, therefore, need
to hold an AFS license,” ASIC commented.

Since
October 2022, ASIC has observed minimal utilization of the current instrument
for registered managed investment schemes. This low adoption rate has prompted
the regulator to reassess the relief’s necessity and effectiveness in the
current market environment.

The
consultation specifically seeks input on whether the crowd-sourced funding
(CSF) regime adequately serves small- to medium-scale capital-raising needs.
Market participants are being asked to provide detailed justification if they
believe the previous securities relief should be reinstated.

Industry
stakeholders have until February 5, 2025, to submit their feedback, with ASIC
emphasizing the importance of detailed explanations supporting any calls for
relief reinstatement. The regulator has indicated that submissions can be made
anonymously, though this may limit follow-up discussions.

ASIC Had a Highly Active
Month

The market
watchdog has had a busy month, highlighted by the release of a new consultation
paper, which follows December’s document addressing cryptocurrency regulations
and seeking feedback from industry stakeholders.

In the
latest consultation paper, ASIC provides 13 examples of products, including
crypto wallets and meme tokens, to demonstrate how existing financial product
definitions might apply to crypto businesses.

During this
period, ASIC also released updated guidelines for financial services firms
holding client assets. These updates introduce new requirements for
cryptocurrency custody and enhance oversight of asset holders. This marks the
first major update since June 2022, expanding the scope of asset-holding
requirements to address emerging risks associated with digital assets while
reinforcing traditional custody standards.

Additionally,
the regulator took legal action against several firms. Australia’s financial
watchdog launched proceedings against HSBC Bank Australia Limited, alleging
that the bank failed to protect customers from scams, leading to millions of
dollars in losses.

Moreover,
ASIC initiated legal action against Binance Australia Derivatives, accusing the
subsidiary of the world’s largest cryptocurrency exchange of misclassifying
over 500 retail investors as wholesale clients. This alleged misclassification,
which reportedly affected 83% of Binance Australia’s client base between July
2022 and April 2023, exposed these clients to high-risk crypto derivative
products without proper safeguards or consumer protections.