ASX sounds crypto exchange custody warning, calls for better regulations

Published at: July 21, 2021

The Australia Securities Exchange (ASX) has weighed in on the issue of crypto custody amid the ongoing discussions within the country’s Senate Select Committee on Financial Regulatory Technology.

In a submission to the committee on July 16, ASX highlighted crypto custody on centralized exchanges as a significant risk factor for investors.

The ASX submission outlined the implications of crypto exchange custody arguing that investors do not have access to their private keys while their funds are domiciled in these platforms — another way of saying “not your keys, not your coins.”

According to the ASX, crypto funds left on exchange wallets are vulnerable to cybersecurity risks in the form of theft by hackers. Crypto exchange hacks used to be a regular occurrence in times past with over $53 billion worth of virtual currencies stolen from platforms between 2011 and 2020.

Related: Senator warns lack of regulations could harm Australian crypto innovation

However, improved security measures on exchanges have stemmed the tide of these thefts significantly but the odd exchange hack still happens every so often.

Apart from cybersecurity problems, the ASX submission to the Senate committee also stated that investors who chose crypto exchange custody run the risk of their funds being handled in an undisclosed or unauthorized manner.

While noting that cybersecurity risks are not unique to crypto exchanges alone, the ASX outlined measures such as regulation, appropriate asset capitalization, and insurance as quality assurance protocols imbibed by legacy asset custodians.

As part of its submission to the committee, the ASX called for disclosure requirements for crypto exchanges as well as independent assurance protocols to better safeguard assets on their platforms. The securities exchange also recommended the introduction of core standards for digital asset custody services.

Given the absence of clear-cut crypto regulations in Australia, the ASX advised that such measures be included in a broader cryptocurrency regulatory framework for the country.

Tags
Related Posts
Singapore finance authority grants licenses to Independent Reserve and DBS
Singapore’s principal financial regulator, the Monetary Authority of Singapore (MAS), has officially approved two companies to offer cryptocurrency services in the country. MAS issued licenses to Australian crypto exchange Independent Reserve and DBS Bank’s brokerage arm, DBS Vickers (DBSV), allowing them to provide digital payment token services under the Payment Services Act (PS Act), on Friday. According to an announcement by Independent Reserve, the firm became the first Australian cryptocurrency exchange available to retail and institutional investors in Singapore. Founded in Australia back in 2013, the company started setting up its first overseas operations in Singapore in late 2019, offering …
Adoption / Oct. 1, 2021
Binance to cease crypto futures and options in Australia
Binance, the world’s largest cryptocurrency exchange by trading volume, continues limiting its services amid the ongoing global regulatory scrutiny, announcing new trading restrictions in Australia. Existing Binance users in Australia will have 90 days to reduce and close their positions for products such as cryptocurrency futures, options and leveraged tokens, the exchange announced Monday. Effective from Friday, Australian users will no longer be able to increase or open new positions for derivatives products on Binance. Users will still be able to top-up their margin balances to prevent liquidations and margin calls, the announcement notes. After Dec. 23, Binance users in …
Bitcoin / Sept. 21, 2021
Binance to delist EUR, GBP and AUD margin trading pairs
Global cryptocurrency exchange Binance continues restricting support for some of its trading services amid an ongoing regulatory crackdown. Binance officially announced Monday that the exchange would delist margin trading pairs for three fiat currencies: the euro, the Australian dollar and the British pound sterling. According to the announcement, Binance will suspend the mentioned fiat trading pairs on Aug. 10 and then switch to automatic settlement and cancel all related pending orders. The isolated margin trading pairs will have been entirely delisted from the exchange by Aug. 12. Binance Margin to Delist $AUD, $EUR & $GBP Pairshttps://t.co/gyBP8XzITI — Binance (@binance) July …
Regulation / July 26, 2021
Russia: Bitcoin Activity Rising Despite Strict Law Proposals
A branch of the Russian federal government has recently published a draft of new litigation called “On Digital Financial Assets,” which is focused on enforcing strict cryptocurrency laws in the country. The legislation has not been approved yet and has been in discussion since 2018. The new laws define Bitcoin as property but not legal tender, and propose, among many other things, that Bitcoin (BTC) miners register as individual companies so they can be appropriately taxed. President Putin is planning on developing and revealing a new tax for Bitcoin miners by July 1, but many are skeptical about the government’s …
Blockchain / July 1, 2020
The world must take a 'collective action' approach to regulations – suggests India’s Finance Minister
India’s Finance Minister, Nirmala Sitharaman, stated that regulation “cannot be done” by a single country, it requires “collective action,” in a recent television interview. Speaking to Rahul Joshi on CNBC-TV18 in India on Feb. 3, Sitharaman noted that while the central bank is the “authority for issuing cryptocurrency,” the rest of the digital assets created outside are “using very useful financial technologies.” Sitharaman said that India is looking at a "global" standard operating procedure (SOP) to be “agreed upon” for regulating crypto assets, ahead of India hosting the G20 Finance Ministers and Central Bank Governors meeting in Bengaluru later this …
Blockchain / Feb. 4, 2023