Australian regulator investor warning targets unlicensed digital currency trading platforms



The Australian Securities and Investment Commission (ASIC) has warned investors to avoid unlicensed cryptocurrency trading platforms, in the latest such warning issued by a market regulator.

In a recently released notice, ASIC said investors should be wary of trading crypto or investing in a digital currency system operated by a platform that does not have an Australian financial services license.

According to ASIC, this is a requirement for any digital currency company doing business in Australia, and a benchmark for anyone looking to choose a platform to invest with.

“An entity must be licensed by ASIC if it provides financial services (such as advice or negotiation) in connection with financial products offered in Australia.”

The regulator went on to warn of the dangers of investing in overseas-domiciled digital currency platforms, including those that offer leveraged exchanges, after reports of a number of Australian investors suffering large losses on these types of trading venues.

He also cited the risks of platform outages, unexpected liquidations and excessive leverage as top risk factors for investors speculating in digital currency markets through unlicensed trading platforms.

ASIC’s advice stopped short of naming a single platform in particular, although the majority of the major digital currency derivative platforms operating in Australia do not have the required license to do so.

ASIC’s opinion comes amid growing regulation against digital currency companies, both in Australia and elsewhere. Regulators like ASIC are forging ahead with increasingly stringent compliance requirements to prevent retail investors from taking unfair losses in digital currency markets.

In its opinion, ASIC said it is aware that some platforms are already taking steps to prevent customers from accessing their platforms without a license.

“ASIC understands that some foreign unlicensed platforms are taking, or have already taken, steps to prevent Australian customers from accessing these financial products. “

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