ASIC Issues Further Warnings to Aussie Investors Using Unlicensed Crypto Companies

August 20, 2021, 9:45 AM AEST - 5 months ago

The Australian Securities and Investments Commission (ASIC) has again cautioned Aussie citizens to be wary when investing in unlicensed cryptocurrency companies. The warning comes after investors across the country reported significant losses after trading crypto-related products such as options, futures or leveraged assets on unregistered crypto exchanges.

In a statement released this week, ASIC warned citizens to only make crypto investments if the company offering them has an Australian financial services (AFS) licence or an Australian market licence (AML).

Concern Over “Excessive Leverage, Platform Outages or Unfair Liquidations”

The statement highlighted specific risks of investing in unregistered crypto exchanges, including platform outages, unfair liquidations and, especially, excessive leverage, which can magnify the trader’s profit as well as loss. 

ASIC noted that unlicensed crypto companies overseas have taken measures to prevent Australians from accessing these crypto financial products, including geo-blocking (imposing geographically based IP restrictions), removing references and links, and placing warnings and disclosures on their respective websites and apps.

The commission recommends that unlicensed crypto businesses can register with an external dispute resolution scheme such as the Australian Financial Complaints Authority.

Boosting Consumer Protection in Crypto Trading

Crypto trading (and the overall crypto space in Australia) is not regulated by Australian financial authorities, yet ASIC has made efforts to boost consumer protection around crypto-related products such as CFD (Contracts for Difference). On July 2, the commission published a consultation paper seeking market participants’ feedback to adjust rules for local operators, protect consumers and promote market integrity.

ASIC recently highlighted how young investors are especially vulnerable to “Finfluencers“, a new trend circulating on social media channels such as YouTube or Instagram where financial influencers claim they can make newcomers millionaires or become financially independent, while not dispensing any actual financial advice.

[New market entrants] have been engaged in short-term speculation rather than long-term wealth creation.


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