Crypto and FOMO attract retail investors, ASIC says

Additionally, ASIC found that around 25% of investors said crypto was their only investment. And crypto trading platforms were among the most popular trading platforms after bank-owned platforms.

The research was conducted in late 2021, before the crypto markets collapsed and amid increased retail investor activity.

“Despite changes in economic conditions since the research was conducted, retail market activity has generally remained elevated this year compared to pre-pandemic levels,” ASIC noted.

The apparent popularity of crypto with retail investors has alarmed the regulator, he said.

“We are concerned about the number of respondents who reported investing in unregulated and volatile crypto-asset products,” ASIC Chairman Joe Longo said in a statement.

“According to the survey, only 20% of cryptocurrency owners viewed their investment approach as ‘risk-taking,’ raising concerns that investors don’t understand the risks of this asset class,” he said. he declared.

“ASIC is also concerned that there are limited protections for investments in crypto-assets given that they have become increasingly mainstream and are heavily advertised and promoted. There are strong arguments for crypto-asset regulation to better protect investors,” he added.

In addition to the popularity of crypto, the report found that retail investors use a variety of digital channels and social media platforms to find investment information, with 41% citing social media including YouTube, Facebook, podcasts and “finfluencers” as sources, and 34% rely on Google searches.

“It’s encouraging to see more people, especially younger investors, engaging in the market,” Longo said. “A third of all investors surveyed said they were ‘long term’. However, half of those surveyed admitted to investing in things because they didn’t want to miss out.

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

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