Crypto Asset – service provider consultation paper

AFA News 16 June 2022.  On 3 June 2022, the AFA made a submission to Treasury in response to a consultation paper on Crypto Asset Secondary Service Providers: Licensing and Custody Requirements.  This consultation is focused on the development of a potential regulatory regime for those entities that provide services in the crypto asset space.  This does not involve the regulation of the actually crypto products, but rather those entities that provide services to this market, such as intermediaries and custodians of crypto assets.  We are open in acknowledging that this leaves a big gap in consumer protections for those seeking to invest in this asset class.

In our submission, we spelt out the issues that licensees and financial advisers have with the uptake of crypto assets by many Australians and the difficulty that they have with providing financial advice on crypto assets.  We are conscious of the lack of research and the limitations with licensee standards and PI Insurance.

The first half of 2022 has been very volatile in the crypto asset space, with the collapse of some crypto assets and the recent termination of withdrawals by service providers.  The price of Bitcoin has also more than halved since its recent peak.  The next few months will be interesting to watch in the context of rising interest rates and an apparent move away from risky assets.

In our submission, we have advocated for introducing a regulatory regime to cover crypto asset secondary service providers and controls around those who seek to influence consumers with respect to crypto assets.  This is clearly an area where some level of regulation is essential.

Please click here to see the AFA submission.

For any questions with respect to this submission, or to provide us with feedback on your thoughts about crypto assets, please email policy@afa.asn.au.

Issued 16.06.2022. AFA Policy & Education Update

End.