Australian securities regulator seeks market feedback on managing risky crypto assets

AUSTRALIA’S securities regulator on Wednesday said 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 asset industry in the wake of rising investor affinity for cryptocurrencies, which are volatile and risky for users and financial institutions.

Prices of Bitcoin, the most popular cryptocurrency, has swung wildly this year, trading over the $35,500 level on Wednesday after hitting an all-time high of just under $65,000 in mid-April.

The Australian Securities and Investments Commission (ASIC) sees a “real risk of harm to consumers and markets” if exchange-traded products 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 corporation law, so they fall under the purview of the commission for regulation.

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