Consumer lobby group CHOICE pushes for tighter crypto protections

Consumer group CHOICE is calling on the federal government to ramp up protections for mum and dad investors amid research that a fifth of all Australians are interested or have invested in cryptocurrency, with 12% – 1 in 9 – buying digital coins in the last 12 months. 

A CHOICE  revealed that a majority of Australians think cryptocurrency trading should have consumer protections similar to trading on the stock market, while only 11% of Australians said they do not think further consumer safeguards are needed.

The findings follow a push by former treasurer and MP Josh Frydenberg to introduce reforms in the digital asset space following a senate report into the sector led by Senator Andrew Bragg. Labor has yet to state whether those proposals will continue under new treasurer Jim Chalmers.

Startup Daily has contacted the Treasurer’s office for comment.

CHOICE wants the new federal Government to urgently regulate exchanges selling the crypto assets in Australia, including a ban on market manipulation.’

CHOICE Senior Policy Advisor, Patrick Veyret said that almost 1 in 5 Australians are either involved or interested in crypto trading amid aggressive marketing and promotion campaigns by the crypto industry.

Crypto companies are now sponsoring Australian sports teams while celebrities are also heavily involved in marketing.

Last night the ABC’s Four Corners program looked at the hype behind cryptocurrencies, with one fund manager saying: “There’s no doubt some people have lost a lot of money.   What we’ve seen is taxi drivers, Uber drivers, mum and dads getting involved in something that is highly, highly speculative, and on a global scale that I don’t think we’ve ever seen before.”

Veyret said the new Federal Government needs to rein in the unregulated crypto industry as one of its financial services reform priorities.

“Australians expect the same level of consumer protection and regulatory oversight for crypto assets as they do with other financial products. ASIC should also be granted powers to ban certain harmful crypto assets from being marketed and sold to retail investors,” he said. 

“The crypto market is booming, but our laws are lagging behind. More and more Australians are purchasing crypto assets such as Bitcoin and Ethereum without adequate consumer protections.”

Veyret said CHOICE is hearing from many Australians about financial loss and other harm caused by purchasing crypto assets.

“CHOICE has also seen a huge surge in scams on crypto exchanges. Our research also shows that two in five people who are interested in crypto are not investing due to the risk of scams. The recent collapse of the supposedly ‘stablecoin’ Terra Luna is a clear example of the extreme volatility in this unregulated market,” he said. 

“The people who push these products tend to overestimate the potential upside while minimising the risks to consumers. Crypto assets can be volatile, complex and high-risk products that are causing greater harm to the community as more and more people are risking their livelihoods based on misrepresentations and marketing.”

Choice has made a submission to Treasury on the issue, which can be read here.