The increase in crypto investing during the COVID-19 pandemic has Australia’s financial services authority concerned, particularly among young and novice investors.
The sheer number of people who bought “unregulated, volatile” crypto assets during the pandemic has alarmed Australia’s financial services regulator chief Joe Longo.
The comments were given by Longo, the head of the Australian Securities and Investments Commission (ASIC), in a press release on August 11 for a study examining investment behavior after the COVID-19 pandemic that was carried out in November 2021.
“We are concerned about the number of people surveyed who reported investing in unregulated, volatile crypto-asset products”
According to the study, cryptocurrency is the second most popular financial product, with 44% of respondents saying they own it. One-quarter of those investors said they were only investing in cryptocurrency assets.
According to Longo, the research shows “the market attraction of crypto-assets,” but investors might not be aware of the risks they are facing.
“According to the survey, only 20% of cryptocurrency owners considered their investment approach to be ‘risk-taking’, raising concerns that investors did not understand the risks of this asset class.”
The dearth of knowledge among ordinary investors, he continued, “makes a strong case for regulating crypto-assets to better protect investors,” given the “minimal protections” that exist for investors.
Senator Andrew Bragg of the opposition party concurred with Longo that lawmakers must move quickly to protect investors and that additional regulation is necessary.
“The Chair is right to identify this as an issue […] As the Senate Inquiry’s Chair I recommended sweeping reforms to regulate crypto. The government should do some work and do it quickly.”
However, according to Australian attorney Joni Pirovich, there is uncertainty on whether ASIC is adequately suited to supervise token issuers and their tokens. She uttered:
“It is not that tokens are unregulated, rather that there is a grey area about whether the token issuers are effectively regulated and supervised by regulators such as ASIC.”
The principal of Blockchain & Digital Assets – Services + Law, Pirovich, observed that token issuance and trading in Australia presents an intriguing quandary for regulators because, once tokens are issued and then exchanged on the open market, it becomes a matter for cryptocurrency exchanges:
“There is room for token exchanges to mature and develop best practice standards to better inform their customers too and policy reform should not stifle this.”
The words from the ASIC chair come at a time when cryptocurrency trading is still not completely regulated in Australia, which caused some industry groups to clash with ASIC representatives earlier this year.
Australia’s financial sector is governed by the Australian Securities and Investments Commission (ASIC), which also has regulatory authority over cryptocurrency investments there.
1,053 Australian people who were at least 18 years old and engaged in trading in securities, derivatives, or cryptocurrencies between March 2020 and November 2021 provided the data for the ASIC study.
