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As a top priority for the incoming Labor government, consumer advocates are pressing it to oversee the unregulated crypto business.
CHOICE, Australia’s leading consumer advocacy group, spokesperson Patrick Veyret said many Australians are reporting financial losses and other hardships resulting from purchasing crypto assets that were not what they seemed to be.
“We’ve witnessed a number of recent exchange collapses when people have lost all of their savings and have no way of recovering it,” he said.
According to a nationwide study released by CHOICE, more than 12% of Australians have purchased cryptocurrencies such as Bitcoin or Ethereum in the past year, putting them at risk of significant losses if they exit the market during the recent fall.
According to the report, another 11% of Australians are interested in purchasing digital currencies.
The majority of those polled thought that bitcoin trading should have consumer protection like stock trading.
Veyret said, “Australians expect the same level of consumer protection and regulatory oversight for crypto assets as they do with other financial products.”
The crypto industry’s aggressive marketing and promotion activities, which frequently involve celebrities and influencers, tempt Australians to make purchases.
According to CHOICE, scams on bitcoin exchanges have also increased.
Consumers reported over 10,000 crypto scams to the Australian Competition and Consumer Commission in 2021, resulting in $129 million in losses.
Last December, the Australian cryptocurrency exchange MyCryptoWallet went bankrupt, leaving more than 20,000 consumers out of pocket after $21 million evaporated.
ACX.io, an Australian exchange, abruptly crashed in January 2019, wiping out $10 million.
CHOICE claims that consumers have no recourse for compensation in these collapses.
The Australian Securities and Investment Commission has limited powers to take action under current laws.
Likewise, market manipulation of the pricing of digital currencies is a concern.
In seven months, researchers from the University of Technology, Sydney Business School discovered more than 350 “pump and dump” incidents on two exchanges, with extreme price distortions and unusually high trading volumes in the millions of dollars.
Manipulators entice hundreds of followers to acquire the coin using social media or encrypted messaging apps, then sell the inflated cryptocurrency. The price drops, and ordinary investors lose money.
Choice has sent a letter to the new federal administration requesting immediate reforms.
The following are the demands, as listed by AAP Newsroom:
1. Exchanges that sell or are in control of cryptocurrencies need to be subject to strong legal obligations, including market integrity rules, reporting requirements, and a ban on market manipulation.
2. People should have strong consumer protections when purchasing crypto assets, including the prohibition of misleading and deceptive conduct and unfair contract terms.
3. A “no loopholes” regulatory regime should capture all crypto asset providers and digital assets, including currencies and non-fungible tokens (NFT).
With AAP.
Jaw de Guzman is the content producer for Comms Room, a knowledge platform and website aimed at assisting the communications industry and its professionals.
