1 year ago
65 The chief of Australia’s financial services regulator Joe Longo has raised the alarm over the huge amount of people that invested in ‘unregulated, volatile’ crypto assets during the Coronavirus pandemic.
Australia’s financial services watchdog sees the surge in crypto investment during the COVID-19 pandemic as a cause for worry, mostly among the young and new investors.
Longo, chairman of the Australian Securities and Investments Commission (ASIC), commented in an August 11 media release on its research that was conducted in November 2021, which mainly looked into investment behavior after the onset of the pandemic, saying:
“We are concerned about the number of people surveyed who reported investing in unregulated, volatile crypto-asset products”
The survey discovered that cryptocurrency was the second most common investment product, with up to 44% of the people surveyed reporting holding it. Of these investors, 25% indicated that Crypto assets were the only investment class that they were involved in.
Longo stated that the research highlights “the appeal of crypto-assets to the market,” but that investors might not know what risks they are taking on:
“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.”
He added that taking into consideration there are “limited protections” for investors, the lack of understanding among the retail investors makes “a strong case for regulating crypto-assets to better protect investors.”
On the other hand, opposition party Senator Andrew Bragg agreed with Longo there have to be more rules and regulations and legislators need to act quickly to protect investors. He stated:
“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, one Australian digital assets lawyer, Joni Pirovich, said that there has been confusion about whether ASIC is well-equipped to oversee token issuers and their tokens. She stated:
“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.”
Pirovich, a principal at Blockchain & Digital Assets – Services + Law, noted that in Australia, token issuance and trading develop an interesting conundrum for the policymakers since after tokens are issued and then traded on the open market, it becomes a matter of crypto 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 ASIC chair remarks come while cryptocurrency trading is still not yet entirely regulated in Australia, causing some sector groups to face off with representatives at ASIC earlier in 2022.
The Australian Securities and Investments Commission (ASIC) oversees financial activity in Australia and has now assumed regulatory oversight over crypto investments in the nation. The ASIC survey gathered its data from 1,053 Australian adults at least 18 years old who traded derivatives, securities, and crypto between March 2021 and November 2021.
