Regulating Digital Asset Platforms: Crypto

Through our frontline services, we see widespread harm in the crypto market, and the urgent need for intervention.

In this submission, we are responding to Treasury’s proposal paper Regulating Digital Asset Platforms and welcome the Government’s intention to regulate the digital asset (crypto) market and acknowledges the significant step forward this entails.

Regulating digital asset platforms (DA Platforms) as a financial service makes sense. However, we have concerns about whether the proposed obligations go far enough to protect consumers from bad actors and scammers. Regulating DA Platforms confers a high degree of legitimacy on the entire industry and we consider the Government has an obligation to ensure that when doing so, it also includes measures to adequately protect consumers from harm.

Cryptocurrency carries significant and inherent risks. Over a million Australians currently hold cryptocurrency worth an estimated $21.6 billion. Info Box 12 in the Paper recognises that the cryptocurrency markets are rife with bad actors attempting to manipulate the market and dupe people into bad investments. The crypto markets are inherently volatile and opaque, and extremely difficult for the average consumer to understand. It is also internationally reported to be used to finance organised crime, human trafficking, and trade in illegal arms and narcotics.

We query whether the Government’s aim of protecting consumers and achieving legal consistency within the international community can be achieved by simply extending financial services laws to DA Platforms or regulating merely to prevent their collapse. Regulation in this area should be as broad as possible to ensure that bad actors are actively prevented from exploiting any loopholes or exemptions.

An important aspect of regulation must be strengthening obligations to prevent scam losses and including measures to address the high-risk nature of financial investment in crypto. We consider that broader regulation to capture more of the crypto sector is likely required.

Read our full submission (PDF).

20231211 Submission from Consumer Action Law Centre
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