ASX, which operates the Australian stock market, says custody of cryptocurrencies held on centralized exchanges poses a significant cybersecurity risk for investors and recommends that regulatory measures be taken to protect digital assets. There were the comments in a submission to the country’s Senate Committee on Australia as a Technology and Financial Center.
- Comparing centralized exchanges ‘access to investors’ private keys to ownership of legal titles, ASX said the agreement may allow users to manipulate their digital assets in an unauthorized manner. Investors had to trust that crypto exchanges were operating in good faith because of the legal position the exchanges had in relation to their assets.
- ASX said the agreements also made assets on centralized exchanges very vulnerable to cybersecurity hacks, a serious concern given the frequency of such attacks in the crypto space. A recent study by Atlas VPN showed that hackers stole $ 3.78 billion in 122 blockchain-related hacks in 2020 alone.
- ASX recommended introducing rules for centralized exchanges in the form of increased disclosure, core standards requirements, and assurances that digital asset custodians are independent.
- The Australian Senate is currently reviewing rules for crypto and fintech, with a simultaneous committee for the Australian fintech sector also examining regulation in the crypto industry. Both committees aim to modernize Australia’s regulatory approach to new technologies like cryptocurrencies and ensure that the country can remain competitive in the face of changing technological and economic circumstances.