Australian Regulator Seeks Feedback on Managing 'Risky' Cryptocurrency Assets

Australia's securities regulator said on Wednesday it would consult market participants on proposals to identify appropriate crypto assets and set up good market practices for financial instruments that expose them to digital currency-backed assets.

The move comes as governments and regulators worldwide try to regulate the digital assets industry in the wake of rising investor affinity for cryptocurrencies, which are volatile and risky for users and financial institutions.

Bitcoin, the most popular cryptocurrency, has seen its price swing wildly this year, trading over the $35,500 (roughly Rs. 26.4 lakhs) level on Wednesday after hitting an all-time high of just under $65,000 (roughly Rs. 48.3 lakhs) in mid-April. Bitcoin price in India stood as Rs. 26.7 lakhs as of 02:15pm IST on June 30.

The Australian Securities and Investments Commission (ASIC) sees a "real risk of harm to consumers and markets" if exchange-traded products (ETPs) and other instruments exposed to crypto-backed assets are not developed and regulated properly.

The regulator is proposing to establish good practices with regard to the pricing, ownership, risk management, and disclosure of these instruments to protect retail investors and maintain fair market practices.

"Market operators and product issuers need to be mindful of meeting their existing regulatory obligations when creating, operating and allowing such products," ASIC Commissioner Cathie Armour said.

The proposals consider these assets as financial instruments under the Australian corporations law, and hence they fall under the purview of the ASIC for regulation.

The regulator will issue a feedback report and publish information on good practices following consultation on the proposals, it said.

© Thomson Reuters 2021