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Australian Securities and Investment Commission (ASIC) has released an information sheet on distributed ledger technology (DLT) or blockchain technology outlining the regulatory considerations it has identified so far.
The Information Sheet 219 sets out an assessment tool for evaluating DLT-based services comprised of six broad questions. ASIC stated that these are questions it would likely ask when it assesses whether the use of DLT by a service provider or infrastructure operator would allow the person to meet their regulatory obligations:
- How will the DLT be used?
- What DLT platform is being used?
- How is the DLT using data?
- How is the DLT run?
- How does the DLT work under the law?
- How does the DLT affect others?
Importantly, the information sheet is for, both existing licensees and start-ups that are considering operating market infrastructure, or providing financial or consumer credit services, using DLT or blockchain.
“This info sheet is for both existing licensees and start-ups. It will help to fast track our discussions with stakeholders and we want to use the framework as a conversation starter as the technology continues to evolve”, ASIC Chairman Greg Medcraft said.
According to the ASIC, the existing regulatory framework currently accommodates the DLT use cases identified till date. However, it expects additional regulatory considerations to arise as DLT matures, which it anticipates to resolve with early and collaborative dialogue between ASIC and the industry.
The ASIC further calls upon fintech and blockchain startups to consider getting legal advice on their proposed business model to assess whether they will be operating with appropriate authorizations. It said:
“If you are an innovative fintech considering the use of DLT and you want to discuss your proposed business model with ASIC, contact us via the Innovation Hub or through your established ASIC channels. Further, whether or not you meet with ASIC about your proposed business model, you should consider obtaining legal advice to determine whether you will be operating the facility or providing the services with the proper authorisations.”
