The Australian Securities and Investment Commission (ASIC) said that due to the high rates of ownership of crypto in the country, regulation is a must.
The securities watchdog said that most of these purchases are made on the advice found on Facebook and YouTube.
The authority backed its stance with results from a poll showing that almost half of the country’s retail investors own one cryptocurrency or the other.
The new Labor government in Australia is under pressure to focus on consumer protection, as it is now dealing with the responsibility of developing a regulatory policy for digital assets like cryptocurrency.
The task had previously been in the hands of the conservative government before it. The former cabinet had initiated a year-long study on the topic.
However, it has not managed to answer relevant questions about whether it should be done and how to go about it.
Back in November, the ASIC conducted a survey, which found that almost 44% of more than 1,000 retail investors owned at least one crypto coin.
As per the results, cryptocurrency has become the second most popular form of investment in Australia after shares.
Almost one-fourth of the investors participating in the poll disclosed that crypto was their only investment.
Importance of regulation
A top official of the Australian central bank had dismissed statistical data last year, which showed that rates of crypto ownership were quite high.
The official had said that the numbers were ‘implausible’, but the ASIC believes that they highlight the need for regulation.
Other than the popularity of crypto, another argument for regulation is the fact that almost 41% of those participating in the survey had made their investments online.
Moreover, about one-fifth of those participating in the survey pointed to the video-sharing platform YouTube and about 1 in 10 investors named the social media network Facebook for investment purposes.
There were only 13% of investors had gotten their information from a broker or a financial advisor.
Joe Lango, the Chairman of the ASIC, expressed the concerns of the Commission about the high number of participants who were making investments in volatile crypto products.
The official said that these investments come with limited protections, even though they are heavily promoted and advertised. He said that this makes regulation important in order to protect investors.
The ASIC had conducted the survey in November, which was the month when two of the top cryptocurrencies in the market i.e. Bitcoin and Ether, had reached record highs.
Since then, there has been a fall in the prices of both cryptocurrencies by two-thirds, while the Australian stock market has recorded a decline of about 6%.
Some of this is because of the increase in interest rates, which has driven investors away from speculative assets.
This retreat is likely what resulted in the decline in the crypto market and resulted in bankruptcies of a number of companies in the space.
Other government agencies like the Taxation Office have also shifted their focus towards the crypto market due to the popularity of these digital assets.