The Australian Securities and Investments Commission (ASIC) has become the latest financial market regulator to ring the warning bell against unlicensed cryptocurrency exchanges. According to a notice published today, the regulator has cautioned Australian investors who are investing in crypto-related financial products and services on platforms that do not hold an Australian Financial Services (AFS) license. Financial regulators across countries are actively working on crypto regulations.
Crypto exchanges are required to be licensed by the ASIC.
“An entity is required to be licensed by ASIC if they provide financial services in relation to financial products offered in Australia,” the financial regulator clarified. The ASIC warning further specified the risks of investing crypto futures and options on offshore platforms, which attracts traders offering high leverages. It detailed that many Australian investors have experienced losses while investing in these platforms due to excessive leverage, platform outages, or unfair liquidations. ASIC tightly regulates the Australian financial services industry and is deemed to be one of the reputed regulators. The regulator had put a limit on the maximum leverage level that any regulated entity can offer to mitigate the risks of retail investing.
Major global crypto derivatives platforms do not hold an ASIC license.
The ASIC notice mentioned that most of the major global crypto derivatives platforms do not hold an ASIC license. Several other regulators are also pointing to the unlicensed operations of crypto platforms, while some are even taking enforcement actions. As reported earlier, the Spanish regulatory agency flagged 12 companies, including two top crypto exchanges Bybit and Huobi, while more than a dozen regulators warned against top crypto spot and derivatives platform Binance. The Australian regulator said, “we understands that some unlicensed overseas platforms are taking, or have already taken, steps to prevent Australian clients from accessing these financial products.”