ASX has a warning tone for the safekeeping of cryptocurrencies and calls for better regulations

The Australian Stock Exchange (ASX) has been addressing the issue of crypto custody as part of ongoing discussions in the country’s Senate Committee on Financial Supervision Technology.

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

The ASX filing outlined the impact of crypto exchanges custody, arguing that investors cannot access their private keys while their funds are on these platforms – in other words, “not your keys, not your money”.

According to ASX, crypto funds that remain in Exchange wallets are very vulnerable to cybersecurity risks in the form of theft by hackers. Cryptocurrency exchange hacks have been a regular occurrence in the past, with over $ 53 billion worth of virtual currency stolen from platforms between 2011 and 2020.

Connected: Senator warns that a lack of regulations could harm Australian crypto innovation

However, improved security measures on exchanges have significantly prevented this wave of theft, but odd exchange hacks are still common.

In addition to cybersecurity issues, ASX’s filing with the Senate Committee also states that investors who choose to hold crypto exchanges risk their funds being improperly processed, disclosed, or unauthorized.

While the ASX noted that cybersecurity risks aren’t unique to cryptocurrency exchanges, they outlined measures like regulation, adequate capitalization, and insurance as security protocols.

As part of their submission to the committee, ASX called for disclosure requirements for crypto exchanges as well as independent audit logs to better protect assets on their platform. The exchange also recommends the introduction of core standards for the safekeeping of digital assets.

Given the lack of clear crypto regulations in Australia, the ASX advises including such measures in the broader crypto regulatory framework for the country.