ASIC’s new crypto warnings for Australia ahead of new Federal Government laws coming

A fresh crypto warning has been issued to Aussies as the industry watchdog slammed the coins as being “created out of nothing”.

Exclusive: Australians have been warned not to invest in cryptocurrencies, with the industry watchdog slamming the coins as being “created out of nothing”.

Australian Securities and Investments Commission (ASIC) chair Joe Longo also hit out at the world’s biggest exchange, Binance, and its boss, Changpeng “CZ” Zhao, over its opaque structure.

He was speaking before Binance and Zhao this week pleaded guilty to US money laundering charges in a deal where the exchange paid authorities more than US$4bn ($6bn) and Zhao quit as chief executive.

Sources said ASIC continues a wide-ranging investigation into Binance’s activities in Australia that has been running since at least April 2021.

Cryptocurrencies exploded in popularity during the pandemic, with the total value of coins in existence rocketing from about $300bn in early 2020 to a peak of more than $4bn in November 2021.

Blockchain and cryptocurrency Binance founder and CEO Chinese-born Canadian Changpeng Zhao, also known as CZ. Picture: AFP

The soaring prices enticed as many as one in five Australian adults to buy crypto, but the gains were largely wiped out by a dramatic collapse in December 2021 and into the early months of last year that alarmed regulators and exposed widespread fraud in the sector.

Crypto was struck from ASIC’s list of priority areas unveiled by deputy chair Sarah Court this week, but Mr Longo said it remained on the regulator’s radar with four court cases currently underway.

ASIC chair Joe Longo also hit out at the world’s biggest exchange, Binance, and its boss, Changpeng “CZ” Zhao. Picture: Aaron Francis / The Australian

“The whole crypto story to my mind remains one that we should be very, very, very cautious about,” Mr Longo said.

“I’m talking about people who can’t afford to lose their money … but I do worry about people who think that it’s an activity that you could equate with superannuation or having a mortgage or buying some property.

“It’s basically created out of nothing, out of the ether – it’s basically computer code.”

He said many cryptocurrencies were also “traded in a way that isn’t transparent, it’s very opaque”.

“My key message remains: be careful before you put your money into crypto,” he said.

He said his organisation expected to get extra funding to tackle crypto once legislation regulating the multibillion-dollar sector passes parliament.

The Albanese government has proposed a regulatory regime which would see crypto exchanges regulated in much the same way as stockbrokers and other financial institutions.

“The other reason I worry about crypto is that you can trade crypto anywhere in the world,” Mr Longo said.

“I mean, look at Binance – where are they based? We still don’t know. So, what am I dealing with?

Crypto was struck from ASIC’s list of priority areas unveiled by deputy chair Sarah Court this week. Picture: Aaron Francis / The Australian

“So crypto regulation has a way to go, one as to its design in Australia, and secondly we have to figure out how we’re going to enforce it.”

Ms Court said ASIC had taken legal action without waiting for new rules because it wanted to make sure that people couldn’t avoid financial services laws just by calling their product a cryptocurrency.

“Crypto has been a really critical part of the enforcement that we’ve been doing this year,” she said.

“We’ve done that suite of work, we need to get the outcomes of those matters.

“If we see misconduct though that raises significant issues in the same way as these other cases then absolutely we will continue to prioritise and take enforcement action,” Ms Court said.

Originally published as ASIC’s new crypto warnings for Australia ahead of new Federal Government laws coming