The changes considered by the Australian Securities Exchange (ASX) to its listing regulations could potentially lead to early-stage technology startups including bitcoin and Fintech companies being blocked from listing on Australia’s primary securities exchange.
The ASX is notable for its endeavor to explore and implement blockchain technology as its post-trade clearing and settlement solution, replacing its legacy system for increased efficiency at lowered costs. Having invested in New York-based blockchain startup Digital Asset, the ASX will see the financial blockchain solutions provider develop a distributed ledger for its operations.
Ironically, new and early-stage blockchain startups with the potential for innovation such as that developed by Digital Asset, within in Australia could soon be persuaded to look elsewhere for opportunities, if certain changes are enforced by the ASX.
Under new admission laws that are being considered by the ASX and the corporate regulator, early-stage companies with limited revenue streams could be blocked from listing on the ASX. The changes being weighed up come despite the fact that 45% of the 105 tech companies floated on the ASX have had revenues of less than $1 million, each.
Any changes that discourage new and growing technology companies from listing would be “disappointing”, said Zhenya Tsvetnenko, founder of Bitcoin and blockchain technology startup DigitalX, a company listed on the ASX. He opined that “stringent processes” were already being enforced by the ASX to ensure that no “bad” companies were eligible to listed.
Speaking to the Australian Financial Review about the newly proposed “draconian measures”, as he put it, he stated:
The listing of DigitalX which started with no revenue has enabled it to grow and transition from a bitcoin mining to a potentially world-changing remittance company, pioneering the blockchain. We posted a half-yearly revenue of more than $US18 million from our bitcoin liquidity provision activities.
Tsvetnenko makes a case for his own company which would not have been able to list on the ASX if such measures were enforced at the time of his company’s application for a float.
Prominent Australian tech entrepreneur and investor Steve Baxter questioned such measures by the ASX, opining that it should have fewer listing regulations instead of tightening controls to deny companies that seek to be listed.
“The prospectus has all the information investors need. I don’t believe in preventing any companies from listing on the ASX,” he stated.
The ASX has its supporters with the possible changes. Adrian Di Marco, CEO of $1.6 billion B2B tech firm TechnologyOne sees reason for concern with tech companies with meager revenues finding a listing on the ASX.
There’s a real appetite to invest in tech these days and all the talk of innovation and creativity has resonated with people.
It’s a positive thing, but like all these things people overreact and throw caution to the wind, but it’s important people are very cautious about these investments. Tightening up the requirements is a good thing.
The existing and extensive stringent checks wielded by the ASX has been well documented in the case of Australian bitcoin miner Bitcoin Group. The miner has – for over a year – sought to list on the ASX before ultimately canceling its IPO after continued scrutiny from the ASX.
All figures are in AUD unless described otherwise.
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