ASIC chair sounds the alarm on crypto investing

  • By Zilla Efrat

There’s a strong case for regulation of crypto assets to better protect investors, according to Joe Longo, chair of the Australian Securities and Investments Commission.

“ASIC is concerned that there are limited protections for crypto asset investments given they have become increasingly mainstream and are heavily advertised and promoted,” he says.

His comments follow ASIC’s release of the findings of its survey of 1,053 retail investors, conducted in November 2021.

It found that 44 per cent held cryptocurrency, making it the second most common product type held after Australian shares at 73 per cent.

A quarter of surveyed investors who held cryptocurrency indicated that cryptocurrency was the only investment they held.

The research also showed that after bank trading platforms (used by 31 per cent of surveyed investors), the three most commonly used platforms all specialised in cryptocurrency.

“We are concerned about the number of people surveyed who reported investing in unregulated, volatile crypto-asset products,” says Longo.

“This research does highlight during this particular point in time, the appeal of crypto assets to the market. According to the survey, only 20 per cent of cryptocurrency owners considered their investment approach to be ‘risk-taking’, raising concerns that investors did not understand the risks of this asset class.”

ASIC’s research also shows that investors are using a range of online trading platforms that offer easy access to an array of products. Many investors are also using digital channels and social media platforms to source information on investing.

“ASIC is working to better understand the use of digital engagement practices and maintain regulatory pace with these developments,” says Longo.

“Risk is part of the investment process, but entities need to operate fairly and avoid the use of features that can harm investors.

“The research has been informing our work in the retail sector, including changing practices in retail product design and distribution, investor protection strategies and crypto assets.”