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Many put faith in cryptocurrency but crash could lead to regulation and new consumer protections

Max Moulder is doing whatever he can to make ends meet.

He’s taken a shot at being an Uber driver.

He’s drawing on his life-long trade of cutting and selling gemstones.

But odd jobs are not earning him enough to keep up with the growing cost of living.

“I’ve done gemstone cutting and trading for a long, long time — since I was 10 years old — that’s not paid off for me,” he said.

“It’s very difficult doing Uber driving with the cost of petrol. That’s not working. And I can’t do cabinet making anymore. So I’m running out of options really.”

In his mind, there’s just one option left: to invest in crypto.

A Caucasian male, wearing a blue polo shirt, looking at the camera.
Max Moulder bought cryptocurrency in the hope its value will rise.(ABC News)

“I feel like I’ve been forced into this,” he told ABC News.

Mr Moulder only started investing three weeks ago when the market tanked. He’s put in $1,000 so far and is willing to invest a lot more.

His view is that he’s buying cheap and so “it can only go upwards from here”.

It is faith, rather than investment fundamentals, that has left Mr Moulder, and millions of other investors around the world, either already suffering or being vulnerable to massive losses.

One in nine Australians bought crypto in the past year

Consumer advocacy group Choice has found that one in nine Australians have bought cryptocurrencies in the past year and that number is expected to keep rising.

Half of them see crypto as a long-term investment, rather than short term speculation and two in five see it as a diversification of their portfolio.

Patrick at his computer at his work office.
Choice’s Patrick Veyret says more consumer protections are needed.  (ABC News: John Gunn)

“People have really been harmed, and the system is really rigged against consumers,” said Patrick Veyret, senior policy adviser for consumer group CHOICE.

“And that’s why we’re calling for stronger consumer protections and strong obligations on cryptocurrency exchanges.”

Since November (when Bitcoin hit a record high of $US69,000), about $US1.5 trillion has been wiped off the value of the entire cryptocurrency market. That’s more than half its value erased in just six months.

Posted , updated 


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UK govt cracks down on misleading cryptocurrency ads to protect consumers


The UK government on Tuesday joined a slew of nations in cracking down on misleading ads to protect


The country has joined Spain, Singapore and India in an effort to reign in advertisements that promise wild returns.





The UK Treasury published a consultation response, saying that proposed legislation will also provide the UK financial watchdog, the Financial Conduct Authority (FCA), powers to regulate the crypto market more effectively.


“Around 2.3 million people in the UK are now thought to own a crypto-asset with their popularity rising – but research suggests that understanding of what crypto actually is is declining, suggesting that some users may not fully understand what they are buying. This poses a risk that these products could be mis-sold,” the Treasury said in a statement.


The UK authority plans to bring crypto-assets within the scope of financial promotions legislation.


It means the “promotion of qualifying crypto-assets will be subject to FCA rules in line with the same high standards that other financial promotions such as stocks, shares, and insurance products are held to,” said the UK Exchequer.


“Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest – but it’s important that are not being sold products with misleading claims,” said Rishi Sunak, Chancellor of the Exchequer.


“We are ensuring are protected, while also supporting innovation of the crypto-asset market”.


The decision to bring these types of advertisements into the scope of regulation will mitigate the risks of consumer harm, ensuring people have the appropriate information to make informed investment decisions.


Spain earlier Singapore and India, stressing that the advertising of crypto-assets must be clear, balanced, fair and explain risks to the public.


Spain’s National Securities Market Commission issued new guidelines, to come into force from February 17, that mandates the following warning to be placed on all crypto ads: “Investments in crypto-assets are not regulated. They may not be appropriate for retail investors and the full amount invested may be lost”.


The aim, said the Spanish watchdog, is to ensure that the advertising of the products offers true, understandable and non-misleading content, and includes a prominent warning of the associated risks.


Earlier, Singapore warned and digital token providers not to promote or advertise their digital tokens via various media platforms to the general public.


In new guidelines, the Monetary Authority of Singapore (MAS) said that digital payment token (DPT or more commonly known as cryptocurrency) service providers should not promote their DPT services to the general public in Singapore.


The Indian government in November last year raised concerns over crypto ads promising wild returns.


Indian crypto players bombarded the public with advertisements across platforms — doubling down on their marketing spend when the cryptocurrencies are yet to be accepted as legal tender and lack legal framework and regulatory norms in the country.


The much-awaited ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’, did not make it to the table during the Winter Session of Parliament amid growing concerns over the misuse of digital coins on the Dark Web for terror acts and drugs trafficking by militant organisations, and for money laundering and hawala-based transactions.


–IANS


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(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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