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Many crypto holders don’t understand the risks: ASIC
According to a new whitepaper from SEC Research and the Australian Securities and Investments Commission (ASIC), Australian shares are now the most common product type held by investors with 73 per cent of investors owning locally held shares.
Following this, 44 per cent of Australians hold cryptocurrencies and 31 per cent hold international shares. And most investors (82 per cent) hold fewer than five different product types in their portfolios. Of all the investors who hold cryptocurrencies, 25 per cent hold only cryptocurrencies in their portfolio while the vast majority (75 per cent) hold cryptocurrencies along with other asset types.
The research also showed that after bank trading platforms (used by 31 per cent of surveyed investors) the three most commonly used platforms all specialised in cryptocurrency.
The corporate regulator’s concern is that many Australian cryptocurrency holders don’t understand the risks associated with this asset class.
ASIC Chair Joe Longo said, “This research does highlight during this particular point in time, the appeal of crypto-assets to the market,” ASIC Chair Joe Longo said. “According to the survey, only 20% of cryptocurrency owners considered their investment approach to be ‘risk-taking’, raising concerns that investors did not understand the risks of this asset class.”
The research highlighted the fact that younger investors were using a wide range of platforms to access a range of products and were also utilising social media platforms for education.
“It’s encouraging to see more people, particularly younger investors, engaging in the market. A third of all surveyed investors said they are ‘in it for the long-term’,” Longo continued.
“However, half of those surveyed admitted they have invested in things because they didn’t want to miss out. This, coupled with more complex and opaque financial product and service offerings, and the speed and reach of marketing and distribution through digital channels, may expose investors to new risks or higher levels of existing risks.”
According to the survey, only 20 per cent of cryptocurrency owners considered their investment approach to be ‘risk-taking’, raising concerns that investors did not understand the risks of this asset class.
Following the crash in cryptocurrency markets during the second half of the year, there is a strong case for regulation of crypto-assets to better protect investors. ASIC is worried that there are limited protections for crypto-asset investments given they were being heavily advertised and promoted by mainstream media.
