The Financial Planning Association of Australia (FPA) has thrown its support behind a regulatory framework for crypto-assets, on the basis that it is consistent with their equivalent non-crypto versions.
In a submission to Treasury, FPA’s head of policy, Ben Marshan, said the technology which underlies an asset is irrelevant when considering the regulation of a financial product.
“To this point, investment in crypto-assets is as much in relation to the asset itself, such as an ether [ETH] coin or a non-fungible token [NFT], as a bet on the sustainability of the technology platform supporting the asset, for example the Ethereum blockchain,” Mr Marshan said.
“Ensuring consistency will reduce confusion for Australian investors and financial service providers.”
The FPA has argued that there is a “urgent” need to better protect consumers both from a risk and education perspective, saying that it does not support regulating crypto-asset secondary services outside of the current regulatory framework.
“Firstly, it would create an alternate, duplicate regulatory regime to regulate what at the core is the purchase and holding of a financial asset to either retail or wholesale investors,” Mr Marshan said.
“Secondly, it would require existing financial service licensees to apply for and hold a separate type of license adding to cost and regulatory duplication.”
To address this concern, Mr Marshan backed a recent recommendation by the Australian Law Reform Commission (ALRC) that specific financial services be regulated through the creation of a rules book.
“Given the emerging nature and nimble approach needed to regulate this rapidly developing space, this concept makes sense,” he said.
Mr Marshan’s comments follow a report released by the ACCC which revealed that losses to cryptocurrency investment scams surged by 270 per cent during 2021 and accounted for much of the increase in overall losses to investment scams.
A total of 4,730 crypto investment scams were reported to ACCC’s Scamwatch service with combined losses of $99 million.
“Cryptocurrency has been described as the wild west with many countries now seeking to regulate aspects of it,” ACCC Deputy Chair, Delia Rickard said.
Earlier, consumer group CHOICE urged the federal government to introduce stronger protections for consumers in the crypto market after a survey it conducted found that one in nine Australians have purchased crypto such as bitcoin in the last 12 months and one in five are either involved or interested in crypto trading.
