The Australian consumer advocacy group ‘CHOICE’ has asked the federal authorities to showcase better crypto regulations for traders by submitting a proposed regulatory framework for crypto exchanges operating in the nation.
The regulatory framework was filed in response to the federal Treasury’s session paper for “crypto asset secondary service suppliers” (CASSPs) outlined as companies providing custodial cryptocurrency wallets and substitute providers.
“As it stands, enforceable protections within the unregulated cryptocurrency market are someplace between negligible and non-existent,” said CHOICE.
The proposed regulatory framework had 4 chief areas:
- CHOICE asked for a general definition of crypto for better regulation.
- It also demanded a license for exchanges which is harmonious with the present monetary licensing.
- Furthermore, CHOICE asked for exchanges to be bound by customer safety legal guidelines to avoid issues like deceptive endorsements.
- Lastly, CHOICE stated that crypto exchanges are required to enact measures for eradicating fraudulent funds as well as reimburse customers after they happen.
The Australian Securities and Investments Commission (ASIC), the country’s top financial services regulator, has previously warned that cryptocurrency is not acceptable as a financial product.
“The crypto market is booming, however our legal guidelines are lagging behind, increasingly more Australians are buying crypto belongings equivalent to Bitcoin and Ethereum without sufficient consumer protections,” Patrick Veyret, Senior Coverage Adviser of CHOICE stated while commenting on the current rules.
Veyret explained that there are situations in which “individuals have misplaced all of their financial savings with no skill to get their reimbursement” in relation to the recent TerraUSD (UST) collapse. It is a “clear instance of the acute volatility on this unregulated market.”
As per an ongoing survey by CHOICE, only one Australian out of ten bought crypto like Bitcoin (BTC) or Ethereum (ETH) in the past year, and 71% who hinted a curiosity in the crypto market did not buy due to concerns of value volatility and scams.
More than half of respondents in a separate survey of 1,034 Australians done in March and April did not know if buying and selling crypto comes with consumer protections similar to those found in the stock market, according to CHOICE.
A similar percentage of people, around 50%, agreed that client protections for crypto trading should be implemented.
As reported earlier, during August 2021, Australian citizens had lost $70M in bogus crypto investments due to lack of knowledge and also due to underrated crypto regulations.
A latest report in March by CHOICE showcased that the Australian Competition and Consumer Commission (ACCC) confirmed a total of 10,500 experiences of crypto scams throughout 2021, with losses of around $92.6 million for the year.
Veyret urged new authorities to make crypto regulation a top priority stating that “The new federal government needs to rein in the unregulated crypto industry as one of its financial services reform priorities, Australians expect the same level of consumer protection and regulatory oversight for crypto assets as they do with other financial products.”
As crypto investment increasingly becomes a mainstream vehicle in the Australian economy, the APRA had recently announced that it wants to implement crypto regulation by 2025.