Australian regulator investor warning targets unlicensed digital currency trading platforms

The Australian Securities and Investment Commission (ASIC) has warned investors to steer clear of unlicensed cryptocurrency trading platforms, in the latest warning of its kind to be issued by a market regulator.

In a recently published notice, ASIC said investors should be wary of trading crypto or investing in any digital currency scheme operated by a platform that does not have an Australian Financial Services license.

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

“An entity is required to be licensed by ASIC if they provide financial services (such as advising or dealing) in relation to financial products offered in Australia.”

The regulator went on to warn of the dangers of investing in offshore domiciled digital currency platforms, including those which offer leverage trading, after reports of a number of Australian investors suffering significant losses on these types of trading platforms.

It also cited the risks of platform outages, unexpected liquidations and excess leverage as amongst the key risk factors for investors speculating on digital currency markets through unlicensed trading venues.

The ASIC notice stopped short of naming any single platform in particular, though the majority of the major digital currency derivative platforms operating in Australia do not have the required license to do so.

The notice from ASIC comes against a backdrop of increasing regulation against digital currency firms, both in Australia and elsewhere around the world. Regulators like the ASIC are stepping forward with increasingly tight compliance requirements, in order to prevent retail investors from suffering unfair losses in digital currency markets.

In its notice, ASIC said it was aware some platforms were already taking steps to prevent clients from accessing their unlicensed platforms.

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

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