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Australian market regulator will prioritise protecting citizens from harm Crypto.

25-Aug-2022 By: Ashish Sarswat
Australian market re

Raising public awareness of the dangers associated with cryptoassets and decentralised finance will be one of its initiatives.

Over the next four years, Australia's financial watchdog, the Securities and Investments Commission (ASIC), has vowed to focus heavily on cryptocurrencies and decentralised financing (DeFi).

The financial regulator ASIC stated in its recently issued "Corporate Plan" that as "developing technology and products disrupt our financial ecosystem," it will be focused on "digitally enabled misconducts" as part of its four-year strategic plan that extends to 2026.

ASIC's chair, Joe Longo, stated that the agency would pay particular attention to fraud and digital assets. Climate risk, our ageing population, rising data and digital technologies, and the notable volatility in the crypto-assets market are all having a revolutionary impact on our regulatory environment. He stated that in 2021, there were 4,783 reports of cryptocurrency investment scams, resulting in alleged losses of $99 million, on the website Scamwatch, which informs consumers and businesses on identifying, avoiding, and reporting frauds.

ASIC stated that the measures will "protect investors from harms posed by crypto-assets" and include, among other things, encouraging the creation of an efficient regulatory framework, putting in place and overseeing the regulatory framework for exchange-related products, and increasing public awareness of the dangers associated with crypto-assets and DeFi.

In an article that appeared in the Sydney Morning Herald on Wednesday, Longo again warned against investing in cryptocurrencies. He warned clients to "be really careful before you do it" and described it as "a really risky and highly flammable activity."

The phrase "ASIC is not opposed to innovation and will utilise all of its resources to hunt for legal uses of the underlying technology, the distributed ledger and blockchain technology, inverted commas, is not to be mistaken or mixed up with investment in crypto assets."

Only a few days before to ASIC's announcement, Australia's newly elected government revealed plans to further regulation of the cryptocurrency industry by carrying out a "token mapping" operation by the end of the year.

There may be a step closer to regulation.

At the moment, cryptocurrency and digital exchanges are only weakly regulated, with exchange operators merely obliged to adhere to the general Corporations Act rules and the anti-money laundering laws of the Australian Transaction Reports and Analysis Centre (AUSTRAC).

The sector has been urging the government to pass legislation to lower investor risk and turn cryptocurrencies into a recognised and secure asset class.

Although Longo acknowledges "regulation is coming" and that there are "thousands of crypto assets or currencies," she adds that "we will have to establish a system that suits us, that works inside our present legal and regulatory frameworks."

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