“Volatile, complex and high-risk”: CHOICE calls for stronger crypto consumer protections

Consumer group CHOICE has released new data from a nationally representative survey of consumers that shows more than 1 in 9 Australians (12%) have purchased crypto such as Bitcoin or Ethereum in the past 12 months.

This is a media release from CHOICE. It was originally published on 31st May, 2022. Read a longer CHOICE article on cryptocurrency.

CHOICE’s survey also revealed that: 

  • Another 11% of Australians are interested in purchasing digital currencies.
  • A majority of Australians agree that cryptocurrency trading should have consumer protections similar to trading on the stock market, while only 11% of Australians said they do not think further consumer safeguards are needed.

“Our data shows that almost 1 in 5 Australians are either involved or interested in crypto trading. This number is rising amid aggressive marketing and promotion campaigns by the crypto industry, often involving celebrities and influencers,” says CHOICE Senior Policy Advisor, Patrick Veyret.

“The crypto market is booming, but our laws are lagging behind. More and more Australians are purchasing crypto assets such as Bitcoin and Ethereum without adequate consumer protections.”

“CHOICE is hearing from many Australians about financial loss and other harm caused by purchasing crypto assets that were not what they appeared to be. We’ve seen a number of recent collapses of exchanges where people have lost all of their savings with no ability to get their money back.”

“CHOICE has also seen a huge surge in scams on crypto exchanges. Our research also shows that two in five people who are interested in crypto are not investing due to the risk of scams. The recent collapse of the supposedly ‘stablecoin’ Terra Luna is a clear example of the extreme volatility in this unregulated market.”

“The people who push these products tend to overestimate the potential upside while minimising the risks to consumers.” 

“Crypto assets can be volatile, complex and high-risk products that are causing greater harm to the community as more and more people are risking their livelihoods based on misrepresentations and marketing,” says Veyret.

CHOICE is calling for the Federal Government to urgently regulate exchanges that sell the crypto assets to provide protections for consumers.

  1. Exchanges that sell or are in control of crypto assets such as Bitcoin need to be subject to strong legal obligations, including a ban on market manipulation.
  2. People should have strong consumer protections when purchasing crypto assets.
  3. The new regulatory regime should capture all crypto asset providers without any loopholes.

“The new Federal Government needs to rein in the unregulated crypto industry as one of its financial services reform priorities. Australians expect the same level of consumer protection and regulatory oversight for crypto assets as they do with other financial products. ASIC should also be granted powers to ban certain harmful crypto assets from being marketed and sold to retail investors.” says Veyret.

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