The financial services regulator in Australia sees the rise of crypto investment during COVID-19 as a cause for alarm, especially among young and inexperienced investors.
Joe Longo, the head of Australia’s financial services regulator, is concerned about the large number of people who invested in “unregulated, volatile” crypto assets during the pandemic.
Longo’s words come from a Thursday media release in which the ASIC conducted research on investment behavior following the beginning of COVID-19. In November 2021, they expressed concern for those who had invested in crypto-assets that are unregulated and highly volatile.
The majority of investors, however, were more interested in the future than in holding on to their gains. According to a recent survey from Research Team , about half of investors (48 percent) plan to sell any or all of their investments before 30 years down the road. They believe cryptocurrencies will be one of the most valuable assets available in 2060.
The majority of respondents (65%) indicated they did not plan on selling their cryptocurrency assets before 2030. Meanwhile, crypto was one of the most widely held investments, with 44% of those who responded saying they had it. 25% of investors said that cryptocurrencies are the only type of investment they participate in.
Longo said that the study demonstrates “the attraction of crypto-assets to the market,” but cautioned that investors may not be aware of the 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 associated with this type of investment.”
“Crypto-assets are a new asset class with limited investor protection,” he said. According to Mr. Camp, because retail investors lack knowledge about crypto-assets, there is “a solid argument for regulating crypto-asset investments to better protect investors.”
“The challenge is that the SEC was not active in this space until relatively recently,” noted Longo. “The idea of whether or not it’s a silver-bullet strategy is relative to what the market wants at any given time.” The fact remains, though, that there will always be high volatility in these markets for a long period of time. There are many different varieties and combinations of cryptocurrency wallets.
However, despite the fact that there is confusion about whether ASIC is properly equipped to regulate token issuers and their tokens, the Australian digital assets lawyer Joni Pirovich stated that there has been a lot of misunderstanding.
Pirovich, who is the head at Blockchain & Digital Assets – Services + Law, said that in Australia, token issuance and trading makes a challenging puzzle for policymakers because once tokens are given out and then bought and sold on the marketplace, it becomes an issue for crypto exchanges: “There is potential for token exchanges to grow up and develop best practice standards to teach their customers as well so policy reform should not get rid of this.”
These remarks come as crypto trading in Australia is yet to be fully regulated, prompting some industry groups to quarrel with ASIC representatives earlier this year.
The ASIC regulates financial activity in Australia and has recently taken charge of cryptocurrency investments as well. In order to gather its data, the ASIC conducted a survey given to 1,053 Australian adults who traded securities, derivatives or crypto between March 2020 and Nov. 2021.
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