ASIC to continue to prioritise cryptocurrency area
The Australian Securities and Investments Commission (ASIC) will continue to prioritise the cryptocurrency area over the next 12 months and beyond. This was made clear by ASIC Chair Joseph Longo in a speech delivered to the Committee for Economic Development of Australia (CEDA).
Mr Longo noted the recent sharp increase in retail investor interest and activity in global markets, including crypto.
ASIC recently released research focused on investor behaviour. Of the 1,000 investors surveyed, more than 50% were aged 18–34, and the research showed that cryptocurrency was the second-most common product type (held by 44% of respondents) after Australian shares (which were held by 73% of respondents). For a quarter of crypto investors, it was their only investment.
Often drawn in by promises of high returns and slick advertising, many investors believed their money was safe. But the value of crypto-assets has dropped by around US$2 trillion in recent months.
In May this year, the so-called ‘stablecoin’ Terra uncoupled from its algorithmic peg to the US dollar and plummeted in value, losing US$40 billion in one day.
ASIC’s essential warning to consumers considering crypto-assets is the following:
They are highly volatile, inherently risky, and complex.
ASIC will continue to prioritise this area over the next 12 months and beyond. ASIC’s crypto regulatory strategy has three cornerstones.
First, ASIC supports the development of an effective regulatory framework and greater regulatory clarity for this class of products.
The regulator welcome yesterday’s announcement by the Treasurer, Assistant Treasurer and Assistant Minister. In particular, ASIC welcomes the focus on consumer protection.
Second, ASIC will continue to take enforcement action to disrupt and deter harmful products already within ASIC’s jurisdiction. This includes those that mimic traditional products or seek to circumvent regulation.
And third, ASIC is collaborating and cooperating with its domestic and international peers. Coordinated action and standard setting is important because the crypto ecosystem does not observe borders or the jurisdiction of any single Australian regulator.
ASIC is also seeing an increase in scams, many purporting to be linked to crypto-assets. Australians lost a record amount to scams in 2021 – more than $2 billion dollars. Investment scams – ASIC’s focus – were the highest loss category, at more than $700 million dollars.