The Australian Securities and Investments Commission (ASIC) is seeking proposals on the best way to regulate crypto-asset exchange-traded funds (ATFs). According to the watchdog, it wants to get feedback from the public while guidelines will be released in the third quarter.

There has been an increased global interest in crypto-asset ETPs, and the Australian regulator wants to act upon this interest to provide a better regulatory framework. While the market is a good development for any economy, there is a high risk of harm to investors and consumers if the products are not operated and developed correctly, according to ASIC.

Most crypto-based assets would not be ideal for an ETF

Sydney-based Cosmos Capital has shown interest to create a Bitcoin ETF while BetaShares and VanEck have lodged submissions for the creation of a crypto ETF.

The Australian regulation released a 46-page consultation paper which noted that most crypto-asset would not be ideal for an ETF, due to several factors such as the value of trades and frequency of trading.

THE only crypto-assets that are likely to satisfy these factors are Bitcoin (BTC) and ether (ETH),” ASIC added.

ASIC stated that product issuers and market operators should be serious about meeting their existing regulatory obligations when they create, allow, and operate such products.

It wants to get feedback from the public on several questions. One of the questions is whether to price crypto-assets to a “robust and transparent standard,” since they are traded on several different trading platforms all over the world.

ASIC wants to get a separate licensing for ETFs

The regulator also prefers having a new class of licenses that is different from other financial services for cryptocurrencies.

According to ASIC, crypto-assets should be considered separately when licensing companies because they do not fall under any existing asset kind.

As a result, ASIC says it wants to get feedback for a proposal that will set up a new asset group that covers crypto assets.

Those who want to send feedback are given until July 27 to do so, according to the notification. ASIC also wants to release its ‘final draft’ on good market practices.

Although Australia is still seeking feedback before approving ETPs, they have received wider acceptance in other jurisdictions. Many European stock exchanges have already listed cryptocurrency-linked ETPs on their platforms.

But the crypto industry is facing a major challenge when it comes to the approval for a Bitcoin ETF in the U.S, which is still far from the progress made in other regions.