Crypto: As risky as gambling and a haven for scams that demands action

Consumer Action is calling for meaningful protections from scams to apply to businesses operating in the crypto sector.

This is a media release from Consumer Action Law Centre. It was originally published on 30th May, 2022. 

The call comes in a submission to the Treasury’s consultation paper Crypto asset secondary service providers: Licensing and custody requirements, in which Treasury proposes options to introducing regulation for crypto market players.

“Government regulation of crypto effectively legitimises these platforms, which are high risk. Many Australians have lost savings through crypto trading. Crypto is as risky as gambling because not only can loads of money be lost quickly, it can also be stolen by scammers,” said Gerard Brody, CEO Consumer Action.

The Centre’s submission says that crypto platforms need to be obliged to detect, prevent and reimburse people from scams.

“We regularly hear from callers to our advice lines who have lost astounding sums of money—often their entire life savings—to scams occurring on crypto platforms. The reality is that these platforms are a conduit for organised criminals and money launderers.

“Any regulation of crypto platforms should require strong standards to identify and prevent scams from happening,” said Mr Brody. “Crypto platforms also should reimburse people for scam losses, so they face the incentive to prevent losses from occurring in the first place”.

The Centre says that these obligations should apply not only to crypto platforms, but also to banks and other financial firms to help keep the payments system safe.

Consumer Action’s submission also called for robust restrictions in relation to advertising and marketing of crypto to the general public.

“Crypto is intentionally complex and should not be advertised and marketed to the general public. The use of celebrity endorsement and association with sports teams is particularly worrying. Advertising and marketing should not allow speculative crypto to be normalised in our community”.

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