Australia’s financial regulator, Australia’s Securities and Investments Commission (ASIC) has pledged to put crypto assets and decentralized finance (DeFi) firmly in its sights over the next four years.
According to ASIC’s newly released “Corporate Plan” released on Aug. 22, the financial regulator said it will be focusing on “digitally enabled misconducts” as “emerging technologies and products change our financial ecosystem” as part of its four-year strategic plan which stretches to 2026.
Joe Longo, chair of ASIC said the regulator would be focusing in particular on scams and crypto-assets.
“Our regulatory environment is changing and evolving — climate risk, our aging population, emerging data and digital technologies, and significant volatility in the crypto-assets market are all having a transformational impact.”
He noted that Scamwatch, a website that provides information to consumers and businesses about recognizing, avoiding, and reporting scams, received 4,783 reports of crypto investment scams and $99 million in reported losses in 2021.
ASIC said the actions will “protect investors from harms posed by crypto-assets” and include supporting the development of an effective regulatory framework, implementing and monitoring the regulatory model for exchange-related products, and raising public awareness of the risks inherent in crypto-assets and DeFi, among other actions.
In a Aug. 23 Sydney Morning Herald report, Longo again warned against investing in crypto, describing it as “a highly risky and highly volatile activity,” and consumers “should be really careful before you do it.”
“ASIC is not against innovation, and will do whatever it can to look for lawful ways of using the underlying technology, the distributed ledger, and blockchain technology, but that’s not to be conflated or confused with investing, inverted commas, in crypto assets.”
ASIC’s announcement came only days after Australia’s new ruling government announced plans to move forward with regulation of the crypto sector by conducting a “token mapping” exercise by the end of the year.
Regulation could be a step closer
Cryptocurrencies and digital exchanges are only loosely regulated at the moment, with exchange operators only required to abide by Australian Transaction Reports and Analysis Centre’s (AUSTRAC) anti-money laundering laws and the general provisions of the Corporations Act.
The industry has been calling for government legislation to reduce the risk for investors and transform cryptocurrencies into an established, safer asset class.
However, there are thousands of crypto assets or currencies and Longo admits “regulation is coming” but “we will have to design a framework that suits us, that works within our existing legal and regulatory arrangements.”