The Australian Securities and Investments Commission (ASIC) today issued a warning against investing in crypto-asset related financial products, such as options and futures, through unlicensed entities.
An entity is required to be licensed by ASIC if they provide financial services (such as advising or dealing) in relation to financial products offered in Australia. Financial products include derivatives such as options, futures, leveraged tokens and binary options.
The sale of binary options to retail clients was recently banned in Australia under an order that will remain in force for 18 months, after which it may be extended or made permanent.
ASIC has received a number of reports from Australians who have used unlicensed platforms to trade crypto-asset related financial products, such as options and futures, and have experienced significant losses due to excessive leverage, platform outages, or unfair liquidations.
The regulator understands that some unlicensed overseas platforms are taking, or have already taken, steps to prevent Australian clients from accessing these financial products. These steps include removing references and links, placing additional warnings and disclosures on the relevant webpages and apps, and introducing geographically based IP restrictions (geo-blocking).
ASIC warns that if an entity is unlicensed, investors are taking a risk that they will not be afforded with the investor protections required of licensed providers.