Australian consumer group calls for urgent regulation of crypto

👋 Want to work with us? CryptoSlate is hiring for a handful of positions!

Australian consumer advocacy group Choice urges the new Labor government to prioritize cryptocurrency regulation, the Australian Associated Press reported. The call for regulation comes amid investor protection concerns after a few recent crypto exchange collapses and a rise in crypto scams observed by Choice, the report said.

Choice spokesperson Patrick Veyret said:

“Choice is hearing from many Australians about financial loss and other harm caused by purchasing crypto assets that were not what they appeared to be. We’ve seen a number of recent collapses of exchanges where people have lost all of their savings with no ability to get their money back.”

Crypto-related crime has been on the rise in Australia, along with the rest of the world. According to the AAP report, around 10,000 crypto scam reports were filed with the Australian Competition and Consumer Commission in 2021. The loss from these scams is estimated to be approximately $92.8 million.

While the losses pale compared to the $14 billion crypto scammers earned across the globe last year, they are still substantial.

In December 2021, the Australian exchange MyCryptoWallet wound up its business. Blockchain Global Limited collapsed in October 2021, owing investors around $15 million(AU$21 million). ACX Exchange, previously operated by Blockchain Global, shut down in early 2020, owing 200 investors around $7 million(AU$10 million).

In the case of each of these collapses, aggrieved investors had no legal recourse for compensation, Choice said.

Additionally, market manipulation is also a major concern as the University of Technology, Sydney Business School, found over 350 “pump and dump” schemes on two exchanges over seven months. These projects experience extreme price distortion, with trading volumes increasing to millions of dollars.

But despite these pitfalls, adoption and interest in cryptocurrencies are soaring in Australia. Over 12% of Australia’s over 26 million population have invested in cryptocurrencies like Bitcoin and Ethereum over the past 12 months, a national survey by Choice showed. The survey found that another 11% of Australians are interested in investing in digital currencies.

Veyret said:

“Australians expect the same level of consumer protection and regulatory oversight for crypto assets as they do with other financial products.”

In terms of regulation, Choice wants exchanges and custodians to be subject to legal obligations, including market integrity rules and reporting requirements. The consumer group also wants a ban on market manipulation.

Since celebrity endorsements and hyped-up marketing have often enticed Australians into buying cryptocurrencies, Choice wants the prohibition of misleading and deceptive conduct and unfair contract terms.

But most importantly, Choice wants regulation with “no loopholes” that encompasses all crypto service providers. The regulatory regime should also cover all digital assets, including currencies and non-fungible tokens (NFTs).