The Australian Securities and Investments Commission has passed interim stop orders against asset manager Holon Investments from offering or distributing three crypto-related funds—tracking Bitcoin, Ethereum, and FileCoin—to investors.
Per the official statement, the said decision has been passed due to Holon’s non-compliant target market determinations [TMDs]. Australia’s apex market regulator made interim orders to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation, or needs.
The official statement noted,
The interim orders stop Holon from issuing interests in, giving a product disclosure statement for, or providing general advice to retail clients recommending investments in the Funds. The order is valid for 21 days unless revoked earlier.
Holon’s Bitcoin, Ethereum, Filecoin funds ‘not suitable’ for investors
Furthermore, the agency is concerned that Holon has not appropriately considered the features and risks of the funds in determining its target markets. It’s a known fact that investors—more often than not—are exposed to profound negative returns during bear market periods. The agency, however, revealed that Holon stated in its product disclosure statements that the “risk that assets in the funds could face a total loss of value.”
In fact, the ASIC considers that the Bitcoin, Ethereum, and Filecoin funds are not suited to the wide target market defined in the TMDs, including investors with a “medium, high, or very high risk and return profile,” those intending to use the fund as a “satellite component” [up to 25%] of their investment portfolio, and those who intend to use the fund as a “solution/standalone component” [75-100%] of their investment portfolio.
If ASIC’s concerns are not catered to in a timely manner, final stop orders will be placed on the Funds. Holon, however, has an opportunity to make submissions to the agency before any final stop order is made.