Holon Crypto Funds Not Suitable for Target Market – Australian Regulator

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Australia’s finan­cial ser­vices reg­u­la­tor has put a hold on the cryp­tocur­ren­cy funds of Holon Invest­ments, say­ing they may be inap­pro­pri­ate for the asset manager’s investors.

Holon’s three cryp­to asset funds, based on Bit­coin, Ethereum and File­coin, have been sus­pend­ed by the Aus­tralian Secu­ri­ties and Invest­ment Com­mis­sion (ASIC) for 21 days, accord­ing to a press release.

This inter­im stop order issued by the ASIC pro­hibits Holon from issu­ing the prod­ucts, pro­vid­ing prod­uct dis­clo­sure state­ments, or rec­om­mend­ing the funds to retail clients.

Holon Has Not Taken Appropriate Risk

ASIC said it issued the sus­pen­sion to pro­tect retail investors, because Holon had not tak­en the appro­pri­ate risks behind the under­ly­ing cryp­to-assets into account when the asset man­ag­er issued its tar­get mar­ket deter­mi­na­tions (TMDs).

Accord­ing to Aus­tralian secu­ri­ties law, when finan­cial insti­tu­tions intro­duce a prod­uct, they must first pub­lish a pub­lic doc­u­ment that essen­tial­ly out­lines whom the prod­ucts are intend­ed for, based on those con­sumers’ finan­cial objectives.

Australia’s finan­cial ser­vices reg­u­la­tor deter­mined that the cryp­to-asset funds being offered by Holon are not well-suit­ed for the tar­get mar­kets ini­tial­ly out­lined by Holon when it issued the products. 

These includ­ed investors whose risk pro­files ranged from medi­um to high, or very high, as well as those who would seek to use the funds as a frac­tion­al por­tion of their port­fo­lio or for the major­i­ty of it.

ASIC said it expect­ed Holon to address the con­cerns raised over the TMDs in a time­ly fash­ion. How­ev­er, it added that if steps were not immi­nent­ly tak­en, the mar­ket regulator’s sus­pen­sion would become per­ma­nent, pre­vent­ing the asset man­ag­er from con­tin­u­ing to offer the products.

Australia Security Concerns Over Crypto

Cryp­tocur­ren­cy adop­tion in the island nation has been increas­ing, despite the mar­ket down­turn over the past year. In fact, one sur­vey showed that women have been demon­strat­ing their invest­ment pro­fi­cien­cy, with their cryp­tocur­ren­cy earn­ings out­pac­ing that of Aus­tralian men. 

Last month, the Aus­tralian gov­ern­ment said it would begin to reg­u­late the cryp­tocur­ren­cy indus­try with a token map­ping exercise.

Yet, as adop­tion has increased, so have asso­ci­at­ed illic­it activ­i­ties with­in the sec­tor. As of last month, Aus­tralians had lost over AUD $242.45 mil­lion to cryp­to and invest­ment scams in 2022. 

In order to address this grow­ing issue, Australia’s Fed­er­al Police launched a new unit to address the surge in the illic­it use of cryptocurrencies.

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