Australia’s Regulator Trains Its Sights on Crypto’s Regulatory Grey Zones

Rapid digital asset innovation that Australia is currently seeing “by or for people unfamiliar with financial services,” is creating a raft of risks, including unlicensed advice and misleading conduct, according to Australia’s corporate and markets regulator, the Australian Securities and Investments Commission (ASIC).

ASIC Chair Joe Longo said those risks are being exacerbated by unclear regulation, which is why the regulator has earmarked the clarification of regulatory gaps around digital asset businesses as a priority for 2026.

Longo highlighted the continuing regulatory uncertainty facing what he refers to as “emerging financial sector participants,” — a category including digital assets, payment rails, and AI-based fintech firms — in its Key Issues Outlook 2026, published January 27.

The ASIC Chair’s comments come after the Australian Government proposed legislation in November 2025 to create a new comprehensive licensing system for digital asset firms.

The Corporations Amendment (Digital Assets Framework) Bill 2025 would establish a framework for businesses holding digital assets on behalf of customers and require all such businesses to hold an Australian Financial Services Licence. It could unlock as much as AU$24 billion in annual productivity gains, according to the Government.

Longo said the responsibility for closing the regulatory gaps ultimately falls on the Government, not regulators like ASIC.

Where a business is currently legitimately unregulated, it is ultimately for government to determine whether a new class of products or services should be brought within a licensing regime.

Joe Longo, ASIC Chair

But he said that regardless of legislative and regulatory changes, some players will intentionally attempt to operate beyond the perimeter of any regulation, which could contribute to an ongoing perception of regulatory uncertainty.

“As a result,” Longo explained, “ensuring clarity on licensing requirements and maintaining effective perimeter oversight will remain priorities for ASIC in 2026.”

Related: Australia’s Crypto Industry Enters Its “Training Phase” as Regulation Turns Real

New Bill Will See Digital Asset Firms Subject to Same Regulation as TradFi

If the Government’s proposed digital asset legislation successfully passes Federal Parliament and becomes law, digital asset-based businesses will become subject to the same kind of regulation TradFi firms have operated under for years. 

This would mean digital asset businesses would be legally required to meet certain standards, including those around honesty, fairness and transparency and would be required to maintain appropriate risk management and compliance systems.

It would also bring crypto firms more explicitly under ASIC’s regulatory oversight, meaning they’d also be required to meet the regulator’s disclosure, conduct and risk obligations, rather than being subject to more piecemeal obligations laid out in crypto-specific rules.

The proposed legislation has passed through the consultation stage and is expected to be tabled in Parliament this year.

Speaking to Decrypt, James Volpe, the founding director of Melbourne-based digital asset firm uCubed, said he thinks Australia is heading in the right direction with its approach to crypto regulation.

“I believe we’re on the right track and that the frameworks are becoming clearer,” Volpe said, adding that the complexity of these digital assets and the products and services built on them create a unique set of risks.

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

Related: Australian Advisers Face Growing Pressure as Crypto Demand Outpaces Advice

Darcy Allen, Associate Professor at RMIT University and Director at the Digital Economy Council of Australia, said passing the new digital assets legislation must be a top priority for the government.

The most effective thing the Australian government can do right now is clearly define the regulatory perimeter by passing long-overdue licensing legislation.

Darcy Allen, Associate Professor at RMIT University and Director at the Digital Economy Council of Australia

The post Australia’s Regulator Trains Its Sights on Crypto’s Regulatory Grey Zones appeared first on Crypto News Australia.