2022 – ‘Complicated and volatile’: Cryptocurrencies must be regulated by financial regulators, consumer advocates say | Cryptocurrency

Consumer groups have called for strict financial regulation of cryptocurrency markets and investments in Australia, saying crypto assets are “complex, volatile and high-risk products that can harm Australian consumers.”

In a submission to the Federal Treasury’s Crypto Consultation Paper, the consumer group Choice called on the federal government to “consider aggressively regulating all crypto assets within the existing regulatory framework for financial products to achieve better outcomes for consumers and society.”

This includes all cryptocurrencies and other assets such as non-fungible tokens. A survey found that 12% of Australians have bought cryptocurrency and 11% are interested in buying it. The survey found that the majority of consumers say that cryptocurrency trading should have strong protections, similar to exchange trading.

The most common reason to invest in cryptocurrency was financial – it was seen as a long-term investment. Those who were interested in investing but did not cite fear of losing money and fraud as the first two reasons for not doing so.

Choice said the commitments to secondary crypto asset service providers, such as Portfolios, exchanges and markets need to be strengthened and should reflect the obligations of the Australian Securities and Investments Commission (ASIC) to financial services licensors.

Choice said consumer protections against misleading behavior, deception and unfair contract terms under Asic and Australian Consumer Law should also apply to these crypto providers.

“Crypto assets are complex, volatile and high-risk products that can harm Australian consumers,” Choice said in its filing. “Strong consumer protection laws are urgently needed to protect people from significant harm.”

Choice pointed to several cryptocurrency exchanges that market themselves to look like financial market exchanges, saying that most consumers use the exchanges with the expectation that they are financial products.

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The consumer group said that exchanges and service providers must commit to protecting consumers on their platforms from fraud, noting that the Australian Competition and Consumer Commission saw 10,412 reports of crypto fraud from consumers in 2021, with losses totaling about $129 million.

“[I had problems with] … this very crypto merchant [that] After many complaints, he refused to release my investment and then without warning closed my account and stole $5,700! Another member reported losing $330,000 through a fake cryptocurrency investment platform, and then another $10,000 through another scam that claimed to be able to help get the money back.

The Center for Consumer Action Law urged the government to focus on protecting the most vulnerable from engaging in crypto investments, which the group likened to gambling. The center said that the law restricting gambling ads should apply to cryptocurrency ads.

“There is no reason for crypto assets or [providers] They should market themselves to anyone under the age of 18,” the center said.

“In addition, we believe that there should be restrictions on mass marketing by these companies as cryptocurrencies are highly risky and inexperienced investors are at high risk of significant money loss.”

The Consumer Action Law Center said crypto ads are already embedding themselves in sports icons and sponsoring teams and venues.

“Just as sports betting odds are almost entirely embedded in sports programming, the current cryptocurrency trend is likely to see speculative crypto assets tied to sports teams and rooted in our psyche as an acceptable way to risk money,” the filing reads. “The government’s failure to curb the harm from gambling advertising does not mean that the crypto industry should also get what we allow in terms of mass marketing.”

Submissions to counseling expired last week. The Treasury Department’s cryptocurrency review has begun by the previous coalition government. The Labor government has not yet decided what its policy on cryptocurrency will be. Guardian Australia has reached out to new Treasurer Jim Chalmers for comment.

The Commonwealth Bank temporarily halted the launch of cryptocurrency trading through its banking app earlier this month, citing in part the need for regulatory certainty amid the turmoil in the cryptocurrency market, which has seen a massive drop in the value of the currency over the past month.