Australian regulator halts three cryptocurrency funds
ASIC moves to protect retail investors from investing in funds that ‘may not be suitable for their financial objectives, situation or needs’
ASIC halts three funds
The Australian Securities and Investments Commission (ASIC) has placed stop orders on three cryptocurrency-related investment funds managed by the Web 3.0-oriented asset manager Holon.
ASIC, Australia’s leading financial market regulator, said it made the decision in order to protect retail investors from investing in funds that “may not be suitable for their financial objectives, situation or needs.”
The three funds in question are the Holon Bitcoin Fund, Holon Ethereum Fund and Holon Filecoin Fund. They all use the American cryptocurrency exchange Gemini for custodial services.
ASIC specifically took issue with the firm’s non-compliant target market determinations (TMDs). The regulator outlined its belief that the funds are not suited to the wide target market defined in their TMDs. The TMDs included investors planning to use a fund as a major component of their investment, between 75 and 100% of their portfolio, or as a satellite component, up to 25%.
The resulator, arguing that the Sydney-based firm had “not appropriately considered the features and risks of the funds in determining their target markets”, said: “ASIC expects Holon to consider the concerns raised about the TMDs and take immediate steps to ensure compliance. If ASIC’s concerns are not addressed in a timely manner, final stop orders will be placed on the funds. Holon will have an opportunity to make submissions to ASIC before any final stop order is made.”
Holon has yet to comment publicly on ASIC’s decision. The fund manager will hope that the regulator’s intervention will not significantly arrest the healthy growth it has enjoyed in recent years. In March 2022, Holon sought to raise $70m (£61m) in a Series B funding round at a $342m post-money valuation.