Australia’s Regulator Imposed Temporary Stop Orders On Three Crypto-related Funds

Due to non-compliant target market determinations (TMDs), Australia’s main financial market regulator has imposed temporary stop orders on three cryptocurrency-related funds planned to be sold to retail investors.

The Australian Securities and Investments Commission (ASIC) said in a media statement dated October 17 local time that it has imposed interim stop orders on three of Australian asset management Holon’s crypto funds, which intend to invest in Bitcoin, Ethereum, and FileCoin.

According to Invest Smart, a target market determination is a document that defines who a product is suited for based on expected requirements, objectives, and financial status, as well as how the product might be delivered.

According to ASIC, the funds are not suitable for the broad target market defined in the TMDs, including those with a medium, high, or very high risk and return profile, those intending to use the fund as a satellite component — up to 25% of their portfolio — and those intending to use the fund for 75% to 100% of their investment portfolio.

ASIC added that the order would be valid for 21 days unless revoked earlier. It said:

“ASIC made the interim orders to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs.”

The funds, known as the Holon Bitcoin Fund, Holon Ethereum Fund, and Holon FileCoin Fund, are all managed investment schemes that attempt to provide exposure to the price of the respective cryptocurrency. They function by investors pooling money and receiving a relative share in the scheme in return.

According to a July blog from Gemini, the pooled money is used to acquire the digital asset listed in the fund, with custody handled by the Gemini crypto exchange.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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