Companies whose activities are related to cryptocurrencies are facing strict monitoring from regulators and financial institutions. The latest example comes from Australia, where a spike in the share price of blockchain-based solutions provider and ICO adviser DigitalX Ltd (ASX:DCC) has triggered questions from ASX.
In a Letter to the company, ASX noted the change in DigitalX’s share price from a low of $0.096 to $0.125 on July 17, 2018, as well as the significant increase in the volume of the entity’s securities traded that day. The Exchange asked the company if it was aware of any information concerning it that has not been announced to the market which, if known by some in the market, could explain the recent trading in securities.
In its response filed earlier today, DigitalX said it was not aware of any such information and added that over the past 12 months its share price has pretty much the movements of the cryptocurrency markets.
This is not the first time that DigitalX’s share price swings lead to queries by ASX. For instance, the company had to explain the change in its share price from $0.063 at market close on October 20, 2017 to an intra-day price of $0.099 on October 25, 2017. Back then, the company also said it was not aware of any information that has not been announced to the market which, if known by some in the market, could explain the pattern of trading in its securities.
Although DigitalX claims that there has been positive news lately about cryptocurrency markets, Australian regulators appear to be rather cautious. In April this year, for example, the Australian Securities and Investments Commission (ASIC) indicated a stricter stance on initial coin offerings (ICOs). ASIC Commissioner John Price noted that the regulator is determined to see Australia’s innovative fintech and regtech flourish in the right regulatory environment but he stressed that “ASIC must be focused on both protecting Australian consumers and facilitating innovation across the financial services industry”.
Mr Price warned about the opportunistic mood dominating in ICOs – including businesses or people looking to undertake an ICO because it is seen as an easy, low regulation and low cost option which could lead to immature businesses coming to market. The legal status of an ICO is dependent on the circumstances of the ICO, such as how it is structured and operated as well as the rights attached to the token.
”Regardless of the structure, however, there is one law that will always apply – you can’t make misleading or deceptive statements about the product. This is going to be a key focus for us going forward”, John Price said.
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