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Holon Crypto Funds Inappropriate for Target Market, Says Australian Regulator

2 mins
Updated by Geraint Price
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In Brief

  • ASIC has suspended the crypto-asset funds of Holon Investments for 21 days.
  • The market regulator said that the products are inappropriate for the target market intended by the asset manager.
  • Cryptocurrency adoption has risen in Australia, but so has associated illicit activity.
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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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Nicholas Pongratz
Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.
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