ASIC warns Australians about Unlicensed Cryptocurrency Companies

By September 7, 2021 No Comments
ASIC warns Australians about Unlicensed Cryptocurrency Companies

The Australian Securities and Investments Commission (ASIC) has again warned crypto holders to be cautious when investing in unlicensed cryptocurrency companies. Attention was called when investors across Australia reported losses after trading crypto-related products like options, futures, or leveraged assets on unregistered cryptocurrency exchanges.

In a released statement, ASIC warned crypto traders to only make investments in companies with an Australian financial services licence (AFS), or an Australian market licence (AML).

What are the risks?

The said statement also focused on certain risks of investing in unlicensed crypto exchanges. These include platform outages, unfair liquidations, and particularly excessive leverage, which can magnify the profits and losses of traders.

ASIC has highlighted that unregistered cryptocurrency companies overseas have taken actions to prevent Aussies from accessing these financial products, including:

  • geo-blocking — geographically based IP restrictions,
  • removing links and references, and 
  • placing disclosures and warnings on their websites and apps.

The commission suggests that unlicensed crypto businesses can register with the likes of the Australian Financial Complaints Authority, an external dispute resolution scheme.

Consumer protection from unlicensed crypto companies

The overall crypto trading and space in the country is not yet regulated by Australian financial authorities. But, ASIC has taken measures to boost consumer protection when it comes to crypto-related products such as Contracts for Difference (CFD).

In July, a consultation paper was published by the commission to seek feedback from market participants to promote market integrity, protect consumers, and modify rules for local operators.

ASIC also highlighted how new crypto investors are very much vulnerable to influencers. They are a new financial trend that circulates on social media channels such as Instagram or YouTube. These ‘finfluencers’ claim they can make newbies become financially independent or even millionaires without actually giving any financial advice.

If you liked our “ASIC warns Australians about Unlicensed Cryptocurrency Companies” and found some valuable information, check our blog space regularly to get more updates on Bitcoin, crypto-backed business loans, and trade cryptocurrencies.