Regulation of crypto assets should be consistent with its equivalent non-crypto versions, according to the Financial Planning Association of Australia (FPA), while calling for greater engagement between the regulator and market participants.
In a submission to Treasury, FPA head of policy, strategy and innovation, Ben Marshan, said the regulation of a financial product or service should not depend on the technology which underlined the asset.
This was particularly important for crypto assets to prevent consumers from the risk of fraud and theft of assets as the only available mechanism to provide protection currently lay with the secondary service provider layer.
However, Marshan said there were two problems with a system in this structure.
“Firstly, it would create an alternate, duplicate regulatory regime to regulate what at the core is the purchase and holding of a financial asset to either retail or wholesale investors. Secondly, it would require existing financial service licensees to apply for and hold a separate type of license adding to cost and regulatory duplication.”
It also called for greater engagement between regulators and market participants including non-traditional market players such as finfluencers to distinguish between those who were genuine players and those who were promoting scams.
“The FPA supports the work of Australian Securities and Investment Commission which issued information sheet 269 to identify what social media influencers practically and clearly can and cannot do, illustrated with examples,” Marshan said.
“There is also a role for ASIC to engage technology platform providers such as Google, Facebook, Twitter to enter into co-operation agreements that would allow regulators and technology platforms to work together to prevent or shut down a scam or fraud being promoted on an online platform.
“These technology platform providers can also help regulators by suspending or removing social media influencers who have broken the law by providing financial advice when not licensed.”
