Australia's securities regulator said on Wednesday it would consult market participants on proposals to identify appropriate crypto assets and set up good market practices for financial instruments that expose them to digital currency-backed assets.

The move comes as governments and regulators worldwide try to regulate the digital assets industry in the wake of rising investor affinity for cryptocurrencies, which are volatile and risky for users and financial institutions.

Bitcoin, the most popular cryptocurrency, has seen its price swing wildly this year, trading over the $35,500 level on Wednesday after hitting an all-time high of just under $65,000 in mid-April.

The Australian Securities and Investments Commission (ASIC) sees a "real risk of harm to consumers and markets" if exchange-traded products (ETPs) and other instruments exposed to crypto-backed assets are not developed and regulated properly.

"Market operators and product issuers need to be mindful of meeting their existing regulatory obligations when creating, operating and allowing such products," ASIC Commissioner Cathie Armour said.

The proposals consider these assets as financial instruments under the Australian corporations law, and hence they fall under the purview of the ASIC for regulation.

The regulator will issue a feedback report and publish information on good practices following consultation on the proposals, it said.