Consumer Action broadly supports the intention of the Government to introduce regulation to oversee the rapidly growing crypto asset environment.
The crypto marketplace currently poses significant risk to consumers in numerous ways, and there is a pressing need for a regulatory regime that provides adequate protections and safeguards.
At a high level, the licensing of crypto asset secondary service providers (CASSPrs) as the mechanism to regulate the sector appears reasonable. However, it is important that the obligations imposed in the marketplace (and therefore, upon CASSPrs) go far enough to ensure that consumers are provided meaningful safeguards.
Regulation of a sector amounts to public recognition and endorsement of its legitimacy. The Government has a responsibility to make the crypto market as safe as reasonably possible before providing this endorsement and should ensure CASSPrs are genuinely up to a safe standard.
Our submission primarily focuses on the importance that the regulation introduces an adequate framework obliging CASSPrs to take genuine steps to protect customers from scams. Scams operating on crypto platforms are becoming increasingly common, resulting in significant losses and significant harm to individuals.
While there are many other facets to the crypto environment that pose a high risk to consumers (eg the volatility of the assets themselves), our submission only touches upon this in a limited manner.
This is not an endorsement of other aspects of the consultation paper, but rather reflects that consumer protection for investment and wealth products is not core to our organisation’s services, priorities, and expertise.
Read our full submission here.220526_Crypto CASSPr sub