Australian investors have been warned against using unlicensed cryptocurrency platforms for trading or other activities
The Australian Securities and Investments Commission (ASIC) issued a warning to Australians using unlicensed cryptocurrency trading platforms and businesses. The regulator warned that dealing with these businesses strips away the investor protection Australians enjoy.
ASIC made this known in a blog post yesterday after receiving numerous complaints from investors. The regulator said Australians should be wary of investing in crypto-related financial products and services from providers that don’t have an AFS licence or an anti-money laundering (AML) policy.
According to the regulatory agency, an entity providing financial products such as options, futures, leveraged tokens and binary options needs to be licensed by ASIC. If they are not licensed by ASIC, the regulator urges Australians to stop trading with them.
ASIC added that it had received numerous reports from Australians who have used unlicensed platforms to trade crypto-asset-related financial products. The investors had ended up experiencing significant losses due to excessive leverage, platform outages or unfair liquidations.
The regulator pointed out that it is taking steps to block Australians from accessing some foreign unlicensed cryptocurrency trading platforms. “These steps include removing references and links, placing additional warnings and disclosures on the relevant webpages and apps, and introducing geographically based IP restrictions (geo-blocking). This prevents more Australian consumers from accessing financial products provided by the unlicensed platform,” ASIC added.
After warning Australians against using unlicensed crypto trading platforms, ASIC advised them to instead use regulated and licensed entities. Crypto investors and traders in Australia are advised to check the AML and KYC policies of a platform and to see if it is registered with the ASIC before opening an account.
More regulators globally are taking proactive steps to properly regulate the cryptocurrency market. Although the digital currency industry is still in its early stages, the rapid growth experienced by cryptocurrencies in the last few years has made it crucial to regulate the activities of market players.