The announcement comes just weeks after China declared the fundraisers illegal.

Australia’s securities regulator has weighed in on initial coin offerings (ICOs), declaring that their legal status is dependent on circumstance and that some may be subject to numerous laws. 

“In Australia, the legal status of an ICO is dependent of the circumstances of the ICO, such as how the ICO is structured and operated, and the rights attached to the coin (or token) offered through the ICO,” the Australian Securities and Investments Commission said in an online statement. “In some cases, the ICO will only be subject to the general law and the Australian consumer laws regarding the offer of services or products. In other cases, the ICO may be subject to the Corporations Act.”

ICOs, a meld of crowdfunding and an initial public offering (IPO), involve the sale of digital tokens by blockchain start-ups looking to grow their business. But unlike a traditional IPO in which investors get shares, investors in ICOs are instead rewarded with mini crypto-currencies, the value of which is directly tied to the business' performance. This means the digital coins grow in value only if the start-up's operation or network proves viable, attracting more investors and driving up liquidity.

But the controversial fundraisers have drawn scrutiny from regulators across the world in recent times, with warnings having been fired over mass phishing scams potentially leaving one-in-10 investors in ICOs penniless.

Earlier this month, China’s central bank declared ICOs illegal as it seized a vice-like grip on the fundraisers that helped trigger a slide in crypto-currencies’ prices. 

In Australia, an assessment of what rights are tied to the coins or tokens issued through an ICO “is the key consideration” in deciding on its legal status, ASIC said. 

“For this purpose what is a right is to be interpreted broadly and includes rights that may arise in the future or on a contingency, and rights that are not legally enforceable,” the watchdog said. 

It explained that if a coin’s value is linked to the management of an operation, the issuer is likely to be offering a managed investment scheme (MIS). 

This is when investors contribute assets – such as crypto-currencies in the case of an ICO – to obtain an interest in a scheme. Interests in a scheme are, generally speaking, a financial product and are regulated by Australia’s Corporations Act.

“If the value of the digital coins acquired is affected by the pooling of funds from contributors or use of those funds under the arrangement, then the ICO is likely to fall within the requirements relating to MISs,” ASIC said. “This is often the case if what is offered through the ICO has the attributes of an investment.”

Macau

Meanwhile, Macau’s financial regulator has banned banks and financial institutions from providing services to companies carrying out ICOs.

The Monetary Authority of Macau, which serves as region’s de facto central bank, has ordered all financial firms operating in the region not to partake or provide services for any tokens related to ICOs or crypto-currencies, following in mainland China’s footsteps.

“Due to recent happenings of financing activities through issuance of tokens in the mainland, financial institutions and non-bank payment institutions are prohibited explicitly by mainland authorities from providing services for these tokens and virtual currencies,” the regulator said in a statement posted on its website.

The watchdog also pointed to a notice it published in 2014 about crypto-currencies, which stated: “…Bitcoin is a type of virtual commodity which is neither a legal tender nor a financial instrument subject to supervision. Any trading of these commodities involves considerable risks, including but not limited to those relating to money laundering and terrorism financing, against which all participants should remain vigilant.”

Macau was a Portuguese territory up until 1999 but is now an autonomous administrative region under China, like Hong Kong.

Bitcoin, the first and most well-known crypto-currency, was down 1.38 per cent at the time of writing (16:23pm, 28 September), trading at $4,150.