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Policy & Regulation

Australian regulator warns for unlicensed crypto companies

18 Aug 2021 : 12:20
2 min read
  • The regulator advises Australian citizens to make investments on licensed exchanges
  • ASIC assigns significant losses in the crypto space to unfair liquidations 
  • Blockchain Australia believes innovation is slowing down because of "wild west"narrative

The ASIC issued a statement advising Australian citizens to make investments in crypto assets through financial institutions that have an Australian Financial Services license or Anti-Money Laundering mechanism.

ASIC assigns significant losses in the crypto space to unfair liquidations

ASIC said it had received reports from investors across Australia that citizens have suffered significant losses after trading crypto financial products such as options, futures, leveraged tokens, and coins. However, ASIC could assign the losses to “excessive leverage, platform failures or unfair liquidations.”

The announcement also highlighted that unlicensed crypto platforms across the border have also invested in features such as geo-blocking and explicit warnings to prevent the onboarding of Australians. ASIC supported the move by stating, “Licensed businesses are subject to a regulatory framework that aims to maintain the integrity, quality, and reputation of the Australian financial system.”

Blockchain Australia believes innovation is slowing down

Blockchain Australia, a local company that advocates for the crypto and blockchain industry, believes that the narrative of the “wild west” of the crypto economy is currently stifling Australian crypto innovation. On July 26, the Australian Association urged a Special Senate Committee to publish a regulatory framework for crypto companies and provide them with a safe haven until legislation is in place.

Regulatory pressure is being felt all over the world. In Spain, for example, the National Securities Market Commission issued a similar warning against 12 unregistered crypto companies operating in its territory. The list also included crypto exchanges Bybit and Huobi, and China also recently shut down 11 of 46 illegal trading companies.

Stan Colenbrander

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