ASIC could move towards “serious” regulation in 2022 and require advisers to hold a licence that is specific to cryptocurrency investing, Pras Indrakumar, manager, wealth and investment, at the crypto asset investment platform told InvestorDaily.
Speaking ahead of InvestorDaily’s 2022 ESG Summit, where he and a panel of speakers will address common concerns around the ESG risk of crypto, Mr Indrakumar said current licensing frameworks may not be sufficient for this asset class.
“A digital currency exchange licence that is currently available is really just like the registration,” Mr Indrakumar said.
“But I think it needs to be a proper trading licence and custody licence. The Australian Financial Services Licence (AFSL) doesn’t encompass everything in this space.”
A range of Australian laws apply to crypto asset advisers and issuers of cryptocurrency assets that fall within the definition of a financial product and other intermediary service providers, including the requirement to hold an AFSL.
ASIC released guidance on crypto-asset related investment products late last year, and recently declared crypto and ESG among its top priorities in 2022.
“ASIC has been very sensitive around making sure they provide the right guidance, so I think it’s going to be small steps for the corporate regulator,” Mr Indrakumar said.
“Having said that, I think they are going to be moving towards serious regulation and providing licensing frameworks.”
Alongside a strong licensing regime, there could be new accreditation requirements for new and existing advisers to enable them to provide advice on this asset class, where courses around blockchain, bitcoin, fintechs and the wider asset class are included in education programs similar to institutions like the MIT.
“The last part is to make sure that investors are only using those accredited, approved providers because there are lots of new initiatives and start-up companies jumping in there without that experience and without actually providing the right service,” Mr Indrakumar said.
Addressing the debate around the ESG impacts of cryptocurrency, including concerns around energy consumption, greenhouse gas emissions in crypto mining, and criminal activity, Mr Indrakumar argued that financial institutions and other companies use software, data, and research to track crypto wallet holders, which provides transparency and curtails criminal activity.
“It tells you exactly who the wallet holders are and how green the bitcoin they are mining is,” he said.
“The network has enough support to penalise those who are not limiting their energy consumption or if the energy is not renewable. The network will not grant them access to bitcoin in these cases.”
To hear more from Mr Indrakumar and other speakers about the key ESG considerations of investing in cryptocurrency, make sure you come along to the 2022 ESG Summit in Sydney on Thursday, 17 March.
Click here to book your tickets and make sure you don’t miss out.
For more information about the event including speakers and the agenda, click here.
