Australia’s Crypto Cry for Consumer Protection: CHOICE’s Bold Recommendations

CHOICE’s Regulatory Framework Proposal

In a daring call to action, Australian consumer advocacy group CHOICE has urged the federal government to step up its game on cryptocurrency investor protection. This comes as CHOICE submitted a comprehensive regulatory framework aimed at cryptocurrency exchanges that operate in the country. The group’s framework appears to be a response to the federal Treasury’s consultation paper focusing on crypto asset secondary service providers (CASSPs)—which are firms providing custodial wallets and exchange services.

The Current State of Negligible Protections

CHOICE did not hold back in their frank assessment of the situation, stating, “As it stands, enforceable protections in the unregulated cryptocurrency market are somewhere between negligible and non-existent.” In light of this, they articulated four critical areas that need reformation for clearer regulation:

• A single definition of crypto: A unified interpretation could simplify regulations across the board.
• Licensing requirements for exchanges: Exchanges should be licensed similarly to traditional financial entities.
• Compliance with consumer protection laws: This would prevent misleading advertising and ensure truthful representation.
• Fraud prevention measures: Exchanges should have protocols in place to combat fraudulent payments and provide reimbursements when necessary.

ASIC’s Role and Warnings

The Australian Securities and Investments Commission (ASIC) has positioned itself as the chief watchdog for financial services in the country. However, it has also made it clear that cryptocurrency isn’t recognized as a traditional financial product. According to CHOICE’s senior policy adviser, Patrick Veyret, the rapid evolution of the crypto market has left laws gasping for breath. Veyret remarked, “The crypto market is booming, but our laws are lagging behind… people have lost all of their savings with no ability to get their money back.”

Survey Insights: The Public’s Perception

According to a current survey by CHOICE, about one in ten Australians ventured into crypto investment in the past year. Interestingly, a whopping 71% of those who showed interest decided against it due to fears of fluctuations in prices and the threat of scams. Furthermore, a separate survey indicated that over half of the respondents are oblivious to whether consumer protections come with crypto trading, while around 50% believe they should be implemented.

The Scamming Epidemic

Scams have become a pervasive issue in the land down under. An alarming report revealed that the first half of 2021 alone saw crypto scams extracting over $25 million from investors. CHOICE’s research corroborated the ACCC’s findings that approximately 10,500 reports of cryptocurrency scams were logged in 2021, racking up losses of around $92.6 million. Despite that daunting figure, the government has begun taking steps to address the situation. Back in March, the ACCC even took Meta to court for promoting fraudulent celebrity crypto ads.

A Call to Action for the New Government

The Labor Party’s past policies concerning cryptocurrency have faced heat, and Veyret passionately appealed for the government to prioritize regulation of the crypto sector. He noted, “Australians expect the same level of consumer protection and regulatory oversight for crypto assets as they do with other financial products.” As it stands, will the new government heed this call, or watch as Australians continue to navigate the treacherous waters of unregulated crypto trading?