• L Misthos and M Bacina

Almost half of investors surveyed (a year ago) hold cryptocurrency: ASIC

According to an ASIC report released last week, nearly half of Australian investors surveyed hold cryptocurrency as an asset. Report 735: Retail Investor Research (REP 735) found that amongst those traded at least once between March and November 2021, 40% of those surveyed held cryptocurrencies . This compared to 43% for residential investment property and the median balances of property and cryptocurrency came out equal at 30% of portfolio value.

ASIC commissioned the survey to gather insight into Australian retail investor behavior. Despite claims that the crypto space is an unregulated 'wild west', the high ownership percentage could indicate that the current regulatory position of crypto assets, that investors get involved at their own risk, is not a barrier to participation.

While Australian shares continue to be the most popular and largest form of investment, cryptocurrencies had surged last year to become the second most commonly held investment asset in those surveyed at least.

Of the 1,053 people surveyed, almost one third (31%) only hold cryptocurrency in their portfolio as their only asset. Despite the increased volume of people speculating on crypto-assets, 83% of investors who only hold crypto did not believe the assets they held were risky or speculative. It was unclear whether those investors were considering this view because they had a deep understanding of digital assets, or held only stablecoins for example, or considered the risk as lower on a long term horizon or treat risk differently for some other reason (there were no questions directly addressing whether investors thought they understood crypto-assets or volatility in digital asset markets for example).

It's unclear why the data being released is so outdated, as the recent crypto price falls would be expected to dramatically alter the make up of portfolios in the surveyed cohort. It may be this is a prelude to further ASIC announcements in coming weeks given comments in the press release accompanying the report.

REP 735 not only shows the increasing popularity of cryptocurrency, but the comments of ASIC chair Joe Longo accompanying the report highlights that the regulation which the crypto-industry in Australia has been pressing for for years will help better protect consumers from unscrupulous operators.

The devil will, of course, be in the detail and consultations are underway for the CASSPr licensing regime which will aim to provide a market licence regime for digital currency exchanges in particular.

That detail should be the subject of very transparent discussions with due consideration to policy objectives of the government so as to encourage local innovation in blockchain while also protecting consumers.