Lucy Clark
Due to “mismatched” target market detections, Australian Cryptocurrency market regulator has placed interim hold orders on three ETFs that track Bitcoin, Ether, and FileCoin.
Due to non-compliant target market designations, Australia’s primary financial market regulator has temporarily suspended the sale of three cryptocurrency-related funds to retail investors (TMDs).
The Australian Securities and Investments Commission (ASIC) said in a press release on October 17, local time, that Australian asset manager Holon has ordered a temporary halt to three crypto funds that separately aim to invest in Bitcoin: BTC, Ether and FileCoin.
Target market identification is a document that describes who a product is suitable for, based on possible needs, goals, and financial situation, as well as how the product can be distributed, according to Invest Smart.
A spokesperson for ASIC told the news that TMDs are “very broad […] given the volatility and speculative nature of the crypto markets.”
The regulator’s worry that Holon did not “appropriately examine the features and hazards of the funds when determining their target markets” was also mentioned.
The Australian Securities and Investments Commission (ASIC) said in a statement that it is considering “funds that do not fit the broad target market defined in the TMDs, including those with a medium, high, or very high risk and return profile, considering using the fund as a “satellite component” — 25% of their portfolio, and those considering using the fund for 75% to 100% of their investment portfolio.
However, ASIC pointed out that the product disclosure statements (PDS) given by Holon stated that investors in crypto funds could experience “complete devaluation.”
According to ASIC, interim orders have been put in place “to safeguard retail investors from possibly participating in funds that may not be suitable for their financial purpose, situation, or needs.” The order will be in force for 21 days unless it is revoked beforehand.
What Holon should alter is unclear, and an ASIC spokeswoman gave no additional information. However, the watchdog stated that it anticipates Holon to take the issues into account and take prompt action to ensure compliance.
The temporary ban will restrict Holon from disseminating a PDS, offering general fund advice, or distributing shares of the funds to retail investors.
A final stop order will be issued if Holon fails to address concerns “on time,” but Holon will be given the chance to speak before such an order is made.
A representative for Holon informed Cointelegraph that the business would not comment “at this stage” on the situation.
The so-called Holon Bitcoin Fund, Holon Ethereum Fund, and Holon FileCoin Fund are all managed investment schemes that seek exposure to the price of the respective crypto and raise money by investors who in turn receive a relative stake in the system. .
In this case, the money collected in the pool is used to purchase the digital asset named in the fund, with custody administered by the Gemini crypto exchange, according to a July blog from the company.