Australian investors may be out of luck when it comes to consulting their financial advisers about cryptocurrencies, due to strict financial regulations.
Why now may be the right time to leap into crypto
Veteran readers of CoinCulture probably do not need to be convinced, but now may actually be the right moment to adopt crypto and submit to “the new paradigm of investing.” With Bitcoin and Ethereum hovering around all-time highs and looking to surge further towards the end of the year, those smart enough to have accumulated have already made tidy profits.
But with news like the Commonwealth Bank getting into crypto and the Senate committee urging lawmakers to follow its recommendation and turn Australia into a crypto hub, it is anything but too late. After all, only about one in three Australian Millennials own crypto, meaning there are plenty more young people and a lot more older folks that can still allocate a part of their portfolio to digital assets.
If that doesn’t sound convincing enough, consider that the ASIC released guidelines for crypto ETPs, meaning investors with a lot of money are looking to get in on crypto as well.
Don’t bank on financial advisers to help you
Most people will still turn to their financial advisers when it comes to investments, so even if you are considering a crypto investment, there is a good chance that you will want to hear a second opinion. Alas, that is not an option in Australia.
Despite the Senate committee urging the government to pass better and more suitable regulations, current federal laws prevent retail investors from getting consulted by any of Australia’s 20,000 qualified advisers, as they are not allowed to offer any advice on crypto. This is quite ironic considering that many people in cryptocurrency get their advice from less qualified people on social media (and a lot tend to do quite well with those).
As it stands, the advisers’ professional indemnity insurance is the problem since it stipulates that virtual currency is excluded from its coverage. “Sophisticated investors,” aka those with a lot of money, may be able to count on advisers, which seems like the financial sector laughing in the face of the average person, considering that high wealth investors are the least likely to need advice on how to handle their money.
Dante De Gori, CEO of the Financial Planning Association, said that current restrictions would need to change and that there was a lack of advisers qualified to speak on this. Furthermore, qualifications and insurers would have to be sorted out.
What should average crypto investors do?
If you are looking to get into crypto, you should consider whether someone that has spent their whole life with different assets was the ideal person to consult you on something completely new. After all, you would not have asked a blacksmith to recommend you a car at the beginning of the 20th century, would you?
Those who are curious to get into crypto should have a look around reputable exchanges like Coinbase or CoinSpot and get a feel for whether they want to dip their toes into crypto. Crypto is, after all, all about personal responsibility.