26 September 2023

Crypto investors a worry for ASIC

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The Australian Securities and Investments Commission (ASIC) is concerned about the number of people investing in unregulated, volatile crypto-asset products.

Following the results of a November survey last year, the Chair of ASIC, Joe Longo said the Commission captured the motivations, attitudes and behaviours of retail investors in the period following the onset of the arrival of COVID-19.

Mr Longo said ASIC’s research surveyed 1,053 Australian retail investors aged 18 and over who had directly traded in securities, derivatives or cryptocurrencies at least once since March 2020.

“Of the 1,053 retail investors surveyed, 44 per cent reported holding cryptocurrency, making it the second most common product type held after Australian shares (which were) at 73 per cent,” Mr Longo said.

“A quarter of surveyed investors who held cryptocurrency indicated that cryptocurrency was the only investment they held,” he said.

“We are concerned about the number of people surveyed who reported investing in unregulated, volatile crypto-asset products.”

Mr Longo said only 20 per cent of cryptocurrency owners considered their investment approach to be ‘risk-taking’, which raised concerns that investors did not understand the risks of the asset class.

He said ASIC was also concerned that there were limited protections for crypto-asset investments.

With more than half (51 per cent) of new investors aged between 18 to 34 years old, Mr Longo said it was encouraging to see more people, particularly younger investors, engaging in the market.

“A third of all surveyed investors said they are ‘in it for the long-term’,” he said.

“However, half of those surveyed admitted they have invested in things because they didn’t want to miss out,” he said.

“This, coupled with more complex and opaque financial product and service offerings, and the speed and reach of marketing and distribution through digital channels, may expose investors to new risks or higher levels of existing risks,” the ASIC Chair said.

Mr Longo said ASIC was working to better understand the use of digital engagement practices and maintain regulatory pace with the developments.

He said risk was part of the investment process, but entities needed to operate fairly and avoid the use of features that could harm investors.

ASIC’s 104-page survey Retail investor research can be accessed at this PS News link.

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