Australia: ASIC chief raises concern over increasing frequency of risk-averse ‘crypto’ investors

Australian Securities and Investments Commission (ASIC) chairman Joe Longo has raised concerns about the massively growing interest in digital currencies in the country. This is due to a survey which suggests that young asset class investors are careless with the risks involved.

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

On 11 August, ASIC released research into the investment behavior of investors in Australia. The 735 Retail Investor Research report (REP 735) aimed to map the attitudes, behaviors and motivations behind investor sentiment since the start of the COVID-19 pandemic.

The survey sought responses from 1,053 retail investors, and up to 44% noted having investments in digital currencies. This shows the growing interest in digital currencies among the population as mainstream recognition increases. At this rate, digital currencies are the second most-held asset class, behind only Australian shares.

In addition, the research shows that approximately 1/4 of retail investors held digital currencies exclusively. According to the report, while banking apps remain the most used by investors, three of the second most used apps are digital currency platforms.

Longo’s concerns stem 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 highlights, at this particular time, how attractive cryptoassets are to the market,” he added.

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

Cybercrime in Australia up 13% in 2021

Despite this, ASIC has attempted to combat fraud in the digital asset space. In a recent joint approach, ASIC and the Australian Competition and Consumer Commission (ACCC) went after fraud sites in the space. Using Netcraft measures, both agencies executed an approach against phishing websites.

Digital currencies have become particularly popular among the general Australian population. The latest Independent Reserve Cryptocurrency Index (IRCI) indicated that 28.8% of Australians see exposure to digital currencies in December 2021. Among these, 72% own or have owned BTC.

With increasing adoption comes an increase in crime. The ACCC noted that Australian investors lost $2 billion to fraud last year. Of this, a whopping 701 million dollars came from investment fraud. In addition, the country saw a 13% increase in cybercrime in 2021.

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