Australia’s financial watchdog is putting the crypto industry on notice, warning that regulatory loopholes pose growing threats as the country races to finalize new licensing rules by 2026.
Quick Summary – TLDR:
- Australia’s financial regulator ASIC warns of rising risks from crypto firms operating outside current regulations.
- The government introduced the Digital Assets Framework Bill in 2025 to mandate licensing for crypto exchanges and custodians.
- ASIC stresses the need for stronger oversight amid a surge in crypto adoption and AI-driven financial products.
- Industry voices support clearer rules but caution that education and innovation must go hand-in-hand.
What Happened?
Australia’s top financial regulator has flagged regulatory gaps in the crypto and payments sector as a major risk heading into 2026. The Australian Securities and Investments Commission (ASIC) says the lack of clear rules is leaving consumers vulnerable to unlicensed financial advice and deceptive practices. The warning comes as the country pushes forward with long-awaited legislation to require crypto firms to obtain financial services licenses.
🚨 REGULATION ALERT: AUSTRALIA 🇦🇺
— Coinccino 📰💰 – Crypto News & Updates (@coinccino) January 27, 2026
Australia’s regulator ASIC has flagged the crypto regulatory gap as a top risk for 2026.
⚠️ Some crypto, payment & AI firms are operating on the edges of regulation
⚠️ Unlicensed advice & misleading services raise consumer risk
⚠️ Some companies… pic.twitter.com/aICOzuq094
ASIC Warns of Unregulated Growth
In its Key Issues Outlook 2026, ASIC identified crypto platforms, payment providers, and AI-powered fintech startups as major concerns. The regulator is particularly worried about entities that deliberately operate outside the existing legal frameworks, which it says adds to regulatory uncertainty.
ASIC Chair Joe Longo emphasized that Australia is facing “major shifts across the financial system”, with increasing pressures on consumers and businesses. He warned that global divergence in crypto rules is fragmenting oversight, making it harder to ensure consistent consumer protections.
Longo has previously cautioned that Australia risks becoming a “land of missed opportunity” if it fails to adapt to the realities of blockchain-based tokenization, referencing global shifts like J.P. Morgan’s full tokenization of its money market funds.
Crypto Adoption is Booming, But So Are Risks
Australia’s embrace of crypto continues to grow. In 2025, 31% of Australians owned crypto, up from 28% in 2024. Self-managed superannuation funds have poured over A$1.7 billion into digital assets, a sevenfold increase since 2021. With major global exchanges like Coinbase developing dedicated pension services, regulators are under pressure to catch up.
Despite this growth, ASIC says innovation is outpacing regulation. Participants unfamiliar with financial rules are introducing new risks, especially in products that blur the line between tech and finance.
Legislation Targets Licensing Gaps
To rein in the sector, the government introduced the Corporations Amendment (Digital Assets Framework) Bill 2025. The legislation would require crypto trading and custody platforms to hold an Australian Financial Services Licence (AFSL). This move would bring them under direct ASIC supervision.
If passed, platforms failing to comply could face penalties up to 10% of annual turnover. The government believes the bill could unlock A$24 billion in productivity gains annually.
The bill is currently under debate in Parliament, introduced by Treasurer Jim Chalmers and Financial Services Minister Daniel Mulino.
Industry Wants Clarity and Innovation Together
Experts and stakeholders largely support the move toward licensing, but they stress that regulatory clarity must be balanced with support for innovation.
Darcy Allen, Associate Professor at RMIT and Director at the Digital Economy Council of Australia, said:
He added that Australia should also “think seriously about how it encourages experimental innovation.”
James Volpe, founding director of Web3 education firm uCubed, believes progress is being made but warned that gaps in awareness and education remain. He said:
SQ Magazine’s Takeaway
I think Australia is finally waking up to the fact that you can’t have a booming crypto industry without strong guardrails. The space is evolving fast, and without clear rules, consumers and investors are left exposed. I’m glad to see serious movement toward real licensing laws. That said, regulation should not kill innovation. The government needs to walk the tightrope: protect users while making sure Australia stays a global player in the digital economy.
