ASIC boss warns of ‘risky’ crypto investments

ASIC boss warns of ‘risky’ crypto investments

The firm’s watchdog chief says he needs to protect customers, not be a crypto cheerleader, as he warns against investing in highly volatile and inherently dangerous commodities like bitcoins.

A day after the federal government announced its regulatory spotlight on cryptocurrencies, Australian Securities and Investments Commission Chairman Joseph Longo said one of the regulator’s top priorities would be to put investors on notice. consumers of the risks associated with the crypto investment space.

ASIC Chairman Joseph Longo said the cryptocurrency has captured the imagination, especially of young people.

ASIC chair Joseph Longo. Image: TASH SORENSEN

“My job is to be candid with the Australian people,” he said. Investing in cryptocurrencies “is a very risky and very volatile business, and you have to be very careful before you do it,” he said at a luncheon for the Economic Development Committee of the United States. Australia on Tuesday in Melbourne.

Longo said, “It’s not my job to be a crypto cheerleader; my job is to protect consumers and enforce the law. Blockchain technology has legitimate and beneficial applications, but it should not be confused with bitcoin and other cryptocurrencies.

According to ASIC research, 44% of investors surveyed held cryptocurrencies. A quarter of individuals indicated that cryptocurrency was their only investment.

Cryptocurrency, according to Longo, was a financial innovation full of promise, celebrity status and instability whose appeal among young people grew due to promises of returns and shrewd advertising. The value of crypto assets has shrunk by around US$2 trillion ($2.9 trillion) in the past few months.

“I think crypto has captured the imagination, especially for the younger generation who see crypto in almost ideological terms as a method of investing away from government authority and control, and they see that as an attraction. .”

Australia will be the first jurisdiction to track the amount, type and underlying code of various cryptocurrencies. It will symbolically map the Australian crypto asset market as the first step towards new regulation in a space where, according to the tax office, more than one million Australians have interacted with crypto assets since 2018.

The industry has urged the government to enact legislation that reduces risk for investors and transforms cryptocurrencies into an established and safer asset class. The former Liberal government drafted amendments last year, which are now being assessed and implemented by regulators and the Treasury.

Due to the complexity of cryptocurrency, controlling it would not be easy.

“I think we’re a long way from having a global consensus on what to do about crypto,” he said.

“We will need to design a framework that works for us, that works within our existing legal and regulatory arrangements.”

Longo made the remarks when ASIC outlined its medium-term intentions. These include cryptocurrency-related initiatives, cracking down on scams, and addressing concerns about greenwashing and sustainable finance.

Longo said that while ASIC intends to disrupt the operations of scammers, it looks like a cat-and-mouse game to track scammers and stay ahead of their more sophisticated strategies.

“They will always be with us. We will always have fraud in our society and horrible people doing terrible things. What has changed, I think, is what we call digital fraud,” he remarked.

This behavior has been supercharged by technology and has now crossed international borders. He said there was no one-size-fits-all solution.

“It’s like a form of pollution. There is no easy answer to this.


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