Australia's growing love for cryptocurrency shakes investment norms

Australia has experienced a burgeoning interest in cryptocurrency since Bitcoin hit an all-time high in mid-March. A testament to this rising interest, an estimated 4.5 million Australians reportedly own some form of digital currency. This intensified inclination has led to an increase in investments originating from individuals, Self-Managed Super Funds (SMSF), and companies.

Among the entities leading the charge in Australia's crypto market is Caleb & Brown, a cryptocurrency brokerage and asset management firm. The firm saw a 17% increase in investors in 2023 alone. Their observations point towards a future marked by increased adoption of digital assets influenced by the generational shift. Interestingly, 80% of the firm's customers are Gen-X or Baby Boomers, while 70% of the Bitcoin market comprises Gen Z and Millennials.

Caleb & Brown's CEO, Jackson Zeng, proffers that the looming retirement of baby boomers and the subsequent wealth transfers will invariably amplify the probability of widespread adoption of digital assets. With his sights set on the inevitability of a wider crypto adoption, Zeng prioritises attention on regulatory policy design, believing that today's small number of crypto users will eventually become the majority.

Zeng, who also serves as a director of Blockchain Australia, identifies three policy areas that require attention: the narrow scoping of custody obligations around centralised brokerages and exchanges given their associated risk to Australians, a requirement for Australian customer funds in global platforms to be segregated and monitored, and increased participation and support from deposit-taking institutions in providing secure banking and payments infrastructure to licensed crypto exchanges.

Moreover, amid growing market adoption and public scrutiny, Zeng underscores the importance of security and data protection. He assures that Caleb & Brown "invests extraordinarily in its security performance to build trust with clients, many of whom are high net-worth individuals". His advisement to investors is to enhance personal security measures by conducting thorough research on their investments and safely storing their assets.

Notably, a downward trend has been observed in cryptocurrency scams as there was an almost 30% decrease in the quantity of theft in 2023 compared to 2022. Zeng commends blockchains for their transparency and their potential to tag transfers, freeze ill-gotten funds and return them to the victims – a feat rarely achievable with cash. But, despite this enhanced scrutiny, Zeng maintains that individual diligence against scams and being informed about the latest security practices in the crypto space are essential for an investor's safety.

Concluding on a high note, Zeng cites that increased investment in security and greater educational initiatives amongst individual buyers will be contributive in reducing scams and hacking. Additionally, increased global law enforcement scrutiny will help reduce illicit activity, whereas government regulations will uphold the integrity of the crypto industry by eliminating rogue players.