Australian regulator warns of risks of investing in crypto-assets

The chairman of the Australian Securities and Investments Commission described cryptocurrencies as excessively volatile, high-risk assets.

Following the recent announcement by the Australian Treasury Department to strengthen oversight of cryptocurrencies, ASIC chief Joseph Longo said that one of the regulator’s key tasks is to alert the public to the risks associated with crypto-assets. He said the popularity of cryptocurrencies among young people has increased dramatically because of attractive advertising and promises of high returns.

According to ASIC research, 44% of investors own digital assets, while 25% invested in cryptocurrencies alone. However, digital asset market capitalisation has declined by around $2 trillion in recent months, much to the regulator’s dismay.

“My job is not to support cryptocurrencies, but to protect consumers and enforce the law. Investing in crypto-assets is a very risky business that does not generate a steady income. The industry will soon be regulated, but people should still exercise maximum caution,” Longo told a meeting of Australia’s Economic Development Committee in Melbourne.

Joseph Longo said bitcoin investments should not be confused with blockchain technology, which can be used legally and does have the potential to improve certain areas of human activity. But cryptocurrencies are not subject to state control because of their decentralised nature, which attracts malicious users. The ASIC chairman added that despite the agency’s attempts to thwart cryptojackers, who are using increasingly sophisticated methods to play cat-and-mouse with the authorities.

“There will always be crooks and criminals in society. However, with the advent of the latest technology, they have easily crossed borders and become active in the digital space,” argues Longo.

In April, the Australian regulator warned of liability for promoting cryptocurrency projects, which the country’s laws classify as financial products. Failure to comply could lead to multi-million dollar fines and imprisonment.