Australia flags consumer risks from crypto regulation gaps

Australia’s financial watchdog has raised concerns about gaps in cryptocurrency oversight, identifying them as a major worry for the coming months.

The Australian Securities and Investments Commission released a report on Monday. It highlights problems with how fast-moving digital currency, payment, and artificial intelligence companies are being monitored. These businesses are working in areas where rules remain unclear. That’s putting everyday Australians at risk of bad advice and deceptive practices, according to the agency.

New licensing bill targets regulatory gaps

Joe Longo, the head of ASIC, pointed to big changes happening in the nation’s financial sector. Pressure is building on consumers, markets, and companies, he said. At the same time, different countries are setting their own rules. This leads to confusion and makes it harder for businesses to follow the law. It also means people in different places get different levels of protection.

The alert follows government efforts to close these oversight holes. Lawmakers introduced new legislation last November aimed at fixing the problem.

The proposed law is called the Corporations Amendment (Digital Assets Framework) Bill 2025. It would create Australia’s first set of rules for companies that hold digital currencies for customers. Officials believe the measure could add $24 billion to the economy each year through improved efficiency. Platforms would need to get an Australian Financial Services license to operate.

The watchdog noted that while some companies legally work outside current rules, others deliberately avoid oversight. This creates confusion about what is and isn’t allowed. That makes it essential to clarify licensing requirements this year.

Experts urge clarity while protecting innovation

Darcy Allen teaches at RMIT University and runs the Digital Economy Council of Australia. The government needs to act quickly, he said. “The most effective thing the Australian government can do right now is clearly define the regulatory perimeter by passing long-overdue licensing legislation,” he told reporters.

Allen also stressed the need to balance rules with room for new ideas. “At the same time, Australia needs to think seriously about how it encourages experimental innovation,” he added.

James Volpe started the Melbourne-based Web3 education company uCubed. He said licensing requirements have improved significantly in recent years. “Licensing rules have come a long way over recent years, and I believe will continue evolving rapidly based on ongoing consultations and oversight/learnings from existing implementations,” he explained.

Volpe believes the country’s moving in the right direction, though problems remain. “I believe we’re on the right track and that the frameworks are becoming clearer,” he said. But he warned that many people still don’t fully understand the technology.

“These are not basic technologies, and it will take time and focus on education to ensure consumers are safe in this new landscape,” Volpe noted.

Allen pointed to ASIC’s Enhanced Regulatory Sandbox review as a chance to adopt better approaches. The sandbox lets approved businesses test financial services and products for up to 24 months without a license. They have to meet certain conditions and protect consumers. Allen suggested moving toward a system where companies can innovate freely unless regulators step in.

“2026 will be a decisive year for Australia’s technology policy,” Allen said. Major changes to digital platform competition and AI rules are moving forward. How officials treat technology companies will affect the country’s economic growth for many years to come, he warned.

If you're reading this, you’re already ahead. Stay there with our newsletter.