The head of the corporate watchdog asserts that he has to protect customers and not be a crypto cheerleader as he cautions against investing in highly volatile, intrinsically dangerous products like bitcoin.
A day after the federal government announced its regulatory spotlight on cryptocurrencies, Australian Securities and Investments Commission chair Joseph Longo stated that one of the regulator’s top priorities would be to warn consumers about the risks associated with the crypto investment space.
ASIC chair Joseph Longo. Image: TASH SORENSEN
“My job is to be frank with the Australian people,” he said. Cryptocurrency investment “is a highly risky and highly volatile activity, and you should be really careful before you do it”, he told a Committee for Economic Development of Australia lunch on Tuesday in Melbourne.
Longo stated: “It’s not my job to be a crypto cheerleader; my job is to protect consumers and administer 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 polled held cryptocurrencies. A quarter of individuals indicated that cryptocurrency was their sole investment.
Cryptocurrency, according to Longo, was a financial innovation full of promise, celebrity status, and instability whose appeal among young people increased due to promises of returns and slick advertising. The value of crypto assets has decreased by approximately $US2 trillion ($2.9 trillion) in recent months.
“I think crypto has captured the imagination, particularly for the younger generation who see crypto in almost ideological terms as a method of investing away from authority and government control, and they see that as an attraction.”
Australia will be the first jurisdiction to chart various cryptocurrencies’ amount, kind, and underlying code. It will token map the Australian crypto asset market as the first step toward new regulation in a space where, according to the tax office, more than one million Australians have interacted with crypto assets since 2018.
The sector has urged the government to enact legislation that reduces the risk for investors and transforms cryptocurrencies into an established, safer asset class. The former Liberal government drafted amendments last year, which are currently being evaluated and implemented by regulators and the Treasury.
Due to cryptocurrency’s complexity, controlling it would not be easy.
“I think we are a long way from having global consensus on what to do about crypto,” he said.
“We will have to design a framework that suits us, that works within our existing legal and regulatory arrangements.”
Longo made the remarks when ASIC highlighted its midterm intentions. These include cryptocurrency-related initiatives, cracking down on scams, and addressing concerns around greenwashing and sustainable financing.
Longo stated that while ASIC intended to disrupt scammers’ operations, it feels like a game of cat and mouse to follow scammers and stay ahead of their more sophisticated strategies.
“They’ll always be with us. We’re always going to have fraud in our society and awful people doing terrible things. What’s changed, I think, is what we call digitally enabled fraud,” he remarked.
This behaviour has been supercharged by technology and has now crossed international borders. He stated that there was no one solution.
“It’s like a form of pollution. There’s no easy answer to it.”
