The growing appetite for cryptocurrency investments from individuals and SMSFs requires stronger consumer protections to be built into banking and payment infrastructure for crypto companies, according to a brokerage and asset management firm.
Caleb & Brown chief executive Jackson Zeng said an estimated 4.5 million Australians own some form of cryptocurrency and this number would rise over the next decade as part of the intergenerational wealth transfer.
“As more baby boomers retire from the workforce and generational wealth transfers increase, the probability of widespread adoption of digital assets multiplies,” Zeng said.
As such, he said there was a need to focus on regulatory policy design as what may affect a small number of crypto investors at present will have a wider impact in the future, adding there were three policy areas that required attention.
He said the first area to address was to employ the narrow scoping of custody obligations around centralised brokerages and exchanges as these present the greatest risk to Australians.
Secondly, he called for Australian customer funds on global platforms to be segregated and monitored by fit and proper responsible people who verify the assets on-chain. He pointed out this approach, taken in Japan, had allowed the full recovery of assets at FTX Japan three months after the collapse of its United States parent, while investors in other countries have received nothing in 15 months.
Lastly, he urged greater participation and support from deposit-taking institutions in providing secure banking and payments infrastructure to licensed cryptocurrency exchanges.
He also noted that while there was an almost 30 per cent decrease in the quantity of cryptocurrency stolen through scams in 2023 compared to 2022, it was critical for individual investors to conduct thorough research on their investments and store their assets in hardware or multi-signature wallets to keep them secure.
“For the general consumer, it’s crucial to remain vigilant against phishing scams by verifying URLs and avoiding sharing sensitive information,” he said.
“Staying informed about the latest security practices and threats in the crypto space are also key strategies for reducing exposure to scams and security breaches – something we advocate to all cryptocurrency investors.”
