Australia: ASIC chair raises concerns about growing rate of risk-negligent ‘crypto’ investors

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The Australian Securities and Investments Commission (ASIC) Chair Joe Longo has raised concerns about the massively increasing interest in digital currencies within the country. This is due to a survey suggesting that young asset class investors are negligent of the risks involved.

Following the heat of the COVID-19 pandemic, global digital currency adoption has surged astronomically. Australian investors have jumped on the bandwagon, as evidenced by past trends and a recent survey.

On August 11, The ASIC released research on investment behavior amongst investors within Australia. The Report 735 Retail Investor Research (REP 735) aimed to survey the attitudes, behavior, and motivations behind investor sentiments since the start of the COVID-19 pandemic.

The survey sought the responses of 1,053 retail investors, and up to 44% noted having investments in digital currencies. This spells the growing interest in digital currencies amongst the populace as mainstream recognition surges. At this rate, digital currencies are the second most held asset class, only behind Australian shares.

Additionally, the research shows that about 1/4 of the retail investors exclusively held digital currencies. Also, per the report, while banking apps remain the most used by investors, three of the next most commonly used apps are digital currency platforms.

Longo’s concerns come from the fact that only 20% of investors in digital currencies acknowledge the risks involved. 

“We are concerned about the number of people surveyed who reported investing in unregulated, volatile crypto-asset products,” Longo said. “This research does highlight during this particular point in time, the appeal of crypto-assets to the market,” he added.

Longo highlighted the fact that a large number of investors do not understand the risks involved in digital currencies. Speaking further, he noted that the lack of consumer protection in the space is worrying. He said regulation is significant at this point to catch up with the growing mainstream adoption.

Cybercrimes in Australia increased by 13% in 2021

Notwithstanding, the ASIC has tried combating fraud in the digital asset space. In a recent joint approach, the ASIC and the Australian Competition and Consumer Commission (ACCC) went after scam sites in the space. Utilizing Netcraft measures, both agencies executed an approach against phishing sites.

Digital currencies have especially become popular amongst the general Australian populace. The latest Independent Reserve Cryptocurrency Index (IRCI) indicated that 28.8% of Australians see exposure to digital currencies as of December 2021. Amongst these, 72% own or have owned BTC.

With increasing adoption comes a surge in crimes. The ACCC noted that Australian investors lost $2 billion to scams last year. Out of this, a whopping $701 million resulted from investment scams. Additionally, the country saw a 13% increase in cybercrimes in 2021.

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