The Australian Securities and Investments Commission (ASIC) has raised concerns about crypto investors being unaware of the actual risk of investing in digital assets. The country has also recorded a rising number of crypto investors.
The ASIC in its latest report stated that of the more than 1,000 retail investors, 44% said they owned cryptocurrencies. This makes cryptocurrencies the second most common product type after Australian shares.
Joe Longo, the chairman of ASIC, said the agency is concerned that there are limited protections for crypto-asset investments given they have become increasingly mainstream, and are heavily advertised and promoted. He expressed concerns about consumers and investors not fully understanding the risks of this activity. Longo said the consumers do not fully understand what they are investing in as well. He described cryptocurrencies as a very speculative, risky activity. The chairman believes consumers need to be very clear that if they lose money, there is little that the ASIC can do about getting it back.
Moreover, 41% of the surveyed highlighted that one of their main sources of investing information were social media platforms such as Facebook, Reddit, and TikTok, as well as influencers from YouTube. They also use Google and personal networks such as family and friends, and co-workers. However, the researchers’ results aren’t an exact portrayal of things today as the survey was conducted in 2021, and that too before the ASIC cracked down on financial influencers.