The call comes after an ASIC survey found more than one in four investors included crypto assets in their portfolios but just one in five considered the activity to be “risky”.  

ASIC chair Joe Longo said the research revealed that growth in retail investing since the pandemic had driven a change in investment patterns.

“The growth in retail markets since COVID-19 has fuelled changes to the mix of product types being traded,” he said. “The research also confirms the prominence of digital and social channels as sources of information for investors, and the diversity in trading platforms they use.”

Of 1,053 retail investors surveyed, 44 per cent held cryptocurrency that made it second only to Australian shares, held by 73 per cent, as an investment class. Among those with cryptocurrency, one-quarter said it was their only investment.

The boom in crypto also showed up in the rise of trading platforms with three of the most commonly used all specialising in digital assets, putting them behind only the mainstream bank sites.

Mr Longo said the research built on ASIC’s understanding of retail investors “and helps us consider where our regulatory efforts are warranted”.

“We are concerned about the number of people surveyed who reported investing in unregulated, volatile crypto-asset products,” he said.

“This research does highlight during this particular point in time, the appeal of crypto-assets to the market. According to the survey, only 20 per cent of cryptocurrency owners considered their investment approach to be ‘risk-taking’, raising concerns that investors did not understand the risks of this asset class.

“ASIC is also concerned that there are limited protections for crypto-asset investments given they have become increasingly mainstream and are heavily advertised and promoted.

“There is a strong case for regulation of crypto-assets to better protect investors.”

The research showed more than half of new investors were aged 18–34 and many were prompted by a fear of missing out. One-third said they used Google to research their investments while more than four out of 10 relied on YouTube, Facebook, podcasts or financial influencers.

“It’s encouraging to see more people, particularly younger investors, engaging in the market,” Mr Longo said. “A third of all surveyed investors said they are ‘in it for the long-term’.

“However, half of those surveyed admitted they have invested in things because they didn’t want to miss out.

“This, coupled with more complex and opaque financial product and service offerings, and the speed and reach of marketing and distribution through digital channels, may expose investors to new risks or higher levels of existing risks.

“ASIC is working to better understand the use of digital engagement practices and maintain regulatory pace with these developments. Risk is part of the investment process, but entities need to operate fairly and avoid the use of features that can harm investors.”

Conducted in November 2021, the ASIC survey quizzed 1,053 retail investors aged 18 and over who had directly traded in securities, derivatives or cryptocurrencies at least once since March 2020, at the onset of the COVID-19 pandemic.