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Australian consumer group CHOICE outlined its crypto regulatory framework in a submission to the country’s Treasury calling for the new federal government to prioritize crypto in its financial services reforms.

Australian consumer advocacy group CHOICE has called on the federal government to provide better protection for crypto investors while submitting a proposed regulatory framework for cryptocurrency exchanges operating in the country.

The regulatory framework was submitted in response to the federal Treasury's consultation paper for “crypto asset secondary service providers” (CASSPs) defined as firms providing custodial crypto wallets and exchange services. CHOICE commented:

“As it stands, enforceable protections in the unregulated cryptocurrency market are somewhere between negligible and non-existent.”

Outlining four main areas in its framework, the group called for a single definition of crypto for better regulation, a license for exchanges in line with current financial licensing, and for them to be bound by consumer protection laws to prohibit things like misleading advertising.

Finally, CHOICE said crypto exchanges need to enact measures for preventing fraudulent payments and reimburse customers when they occur.

The Australian Securities and Investments Commission (ASIC), the chief financial services regulator in the country has previously warned that cryptocurrency is not recognized as a financial product. Commenting on the current regulations CHOICE’s senior policy adviser Patrick Veyret said:

“The crypto market is booming, but our laws are lagging behind, more and more Australians are purchasing crypto assets such as Bitcoin and Ethereum without adequate consumer protections.”

Veyret added that there are instances where “people have lost all of their savings with no ability to get their money back” citing the recent fall of TerraUSD (UST) as a “clear example of the extreme volatility in this unregulated market.”

According to an ongoing survey conducted by CHOICE, only around one in ten Australians purchased crypto such as Bitcoin (BTC) or Ethereum (ETH) in the past year, and 71% who signaled an interest in the crypto market didn’t purchase due to concerns of price volatility and scams.

CHOICE reported that a separate survey of 1,034 Australians conducted in March and April revealed over half of respondents didn’t know if trading crypto came with consumer protections like those which apply to the stock market. Around the same amount of people (50%) believed such consumer protections for crypto trading should be enacted.

Related: Australia’s plan to create a crypto competitive edge in 12 steps

As reported by Cointelegraph in August 2021, the first six months of that year saw investment scams in Australia cost investors more than $50 million with crypto scams netting bad actors over $25 million, more than half of the reported losses.

A more recent report in March by CHOICE found the main competition regulator the Australian Competition and Consumer Commission (ACCC) confirmed nearly 10,500 reports of cryptocurrency scams in 2021, with losses of around $92.6 million for the year.

The government is taking action on crypto despite the current lack of regulations, in March the ACCC took Meta to court for publishing scam celebrity crypto ads, and the ACCC has stated it wants to support the crypto industry but notes challenges with regulating such innovative technologies.

The country’s new leading party, the Labor Party, has faced criticism in the past for its lack of a cryptocurrency policy and Veyret called on the new government to make regulating crypto a top priority:

“The new federal government needs to rein in the unregulated crypto industry as one of its financial services reform priorities, Australians expect the same level of consumer protection and regulatory oversight for crypto assets as they do with other financial products.”