In January 2019, the Treasury released an Issues Paper
(Paper) which forms part of its review into
Initial Coin Offerings (ICOs). Four key
questions are addressed in the Paper:
- what is the clearest way to define ICOs and different
categories of token?
- what are the key drivers of the ICO market going forward?
- what are the opportunities and risks posed by ICOs?
- what changes, if any, are needed to Australia's current
regulatory and tax treatment of ICOs?
Definition and token categories
Although there is no widely-adopted definition of an ICO, the
Paper notes that it involves:
'... the creation of digital tokens by an issuer using
distributed ledger technology (DLT). The tokens are acquired
by investors and potential consumers through online auction or
subscription, typically in exchange for a cryptocurrency such as
Bitcoin or for official fiat currency such as United States
dollars.'
