Longo outlines ASIC’s work on crypto and scams

  • By Zilla Efrat

The Australian Securities and Investment Commission would continue to prioritise the regulation of crypto assets over the next 12 months and beyond, the regulator’s chair Joseph Longo said on Tuesday.

In a speech to a Committee for Economic Development of Australia (CEDA) lunch in Melbourne, he warned that these assets were “highly volatile, inherently risky and complex”.

“I’m concerned that investors do not fully understand what they’re investing in or the very significant risks,” he said, noting that of the 1,000 investors recently surveyed by ASIC, as many as 80 per cent did not even consider crypto risky.

Longo said many investors believed their money was safe, yet the value of crypto assets had dropped by around US$2 trillion in recent months. And, 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.

Longo said ASIC’s crypto regulatory strategy had three cornerstones.

First, ASIC supported the development of an effective regulatory framework and greater regulatory clarity for this class of products.

Second, ASIC would continue to take enforcement action to disrupt and deter harmful products already within its jurisdiction. This included those that mimic traditional products or seek to circumvent regulation.

And third, ASIC was collaborating and cooperating with its domestic and international peers. “Coordinated action and standard setting are important because the crypto ecosystem does not observe borders or the jurisdiction of any single Australian regulator,” he said.

Longo revealed that ASIC was also seeing an increase in scams, many purporting to be linked to crypto assets.

“The size and scale of the problem is immense. It can feel like a game of cat and mouse as we pursue scammers and try to get ahead of the increasingly sophisticated techniques they use,” he said.

“Our strategy is to disrupt their operation, using innovative, data-driven approaches to drive early intervention and, where possible, prevent loss to consumers in the first place.”

ASIC had, he said, work underway with several banks to look at their scam identification and response strategies. Many had sophisticated scam detection systems in place already, but further improvement was needed.

“Over the last few months, we’ve met regularly with digital platforms – including Google – to discuss the advertising of financial products.

“You may have seen Google’s recent announcement requiring advertisers wanting to promote financial products and services in Australia to demonstrate they are licensed by ASIC or are exempt from being licensed.

“This is an expansion of the verification process that it put in place in the United Kingdom last year, via the Financial Conduct Authority.”

Longo also reported that ASIC had recently worked with the Australian Competition and Consumer Commission to trial a service that takes down fraudulent websites.