Crypto regulations, or the lack thereof, have long been a hot topic of debate in countries from all across the globe. That’s because regulating digital currencies is notoriously challenging since they are not similar to traditional asset categories and they will never be.
The fact that cryptocurrencies lack central control, are highly volatile, diverse, and borderless, coupled with how fast the technology is advancing, makes it next to impossible to include them in existing legal frameworks, while developing dedicated regulations is extremely difficult as well. That’s also why it’s so hard to make accurate crypto predictions and foresee market movements.
Yet establishing clear rules and standards for digital assets is absolutely crucial for ensuring user protection and facilitating a smooth integration of these instruments into mainstream finance. Some jurisdictions have fared better in this respect than others.
There are countries or regions with robust legal frameworks around crypto, such as the EU’s Markets in Crypto-Assets Regulation (MiCA), just as there are countries with little to no crypto regulations, or nations where digital currencies are completely banned.
Implementing viable crypto regulations is also very much an issue in Australia. Recently, the Australian Securities and Investments Commission (ASIC), the agency responsible for overseeing corporate and financial services in the country, declared crypto regulation gaps as a primary risk for the current year, as expressed in its Key Issues Outlook 2026.
The looming risks of insufficient oversight
The Key Issues Outlook is an annually released report that tracks the most significant issues affecting Australia’s financial system.
According to this year’s analysis, one of the main concerns comes from the rapid development of the fintech sector, particularly the growing prevalence of digital assets, unlicensed crypto companies, and AI services, which expose users to increased risks.
Many of these entities function without direct oversight from authorities, which means their actions and recommendations could be misleading and cause customers to make ill-informed or even detrimental decisions.
ASIC Chair Joe Longo talked about how Australian consumers, markets, and companies are facing mounting pressures, leading to notable shifts in the country’s economic sector.
At the same time, there’s a notable and growing discrepancy between legal frameworks at the global level, as each country adopts a different approach to policy development based on its specific goals. This fragmented regulatory landscape leads to inconsistent rules and complicates compliance efforts.
The report also maintains that the government should be the one to decide if these products and services should be subjected to regulatory scrutiny, especially since some of them prefer to remain in a grey legal area and avoid supervision, which only increases regulatory uncertainty and weakens customer protection.
For this reason, ASIC should focus on maintaining licensing rules as clear as possible and ensuring all market players comply with applicable laws and standards.
Spotlight on licensing legislation
The report’s insights come at an opportune time, as Australia has been working on addressing these issues by introducing amendments to the Corporations Act 2001 and Australian Securities and Investments Commission Act 2001, which lay the groundwork for updating the regulatory regime for digital assets.
More specifically, these efforts are aimed at advancing the Corporations Amendment (Digital Assets Framework) Bill 2025, which will establish strict rules for companies that offer crypto trading and custody services, requiring them to obtain an Australian Financial Services License (AFSL).
Darcy Allen, Professor of Economics at RMIT University and Director at the Digital Economy Council of Australia, weighed in on the matter, stating that the main point of concern for Australia at the moment is establishing explicit legal limits by implementing licensing legislation.
Another crucial aspect that authorities should focus on, according to Allen, is the approach to innovation, given that the digital assets represent a dynamic environment characterized by rapid growth, so regulatory frameworks should be able to keep up with this accelerated evolution.
James Volpe, co-founder and director of Web3 education firm U Cubed, also agrees that crypto regulations gaps should be addressed as soon as possible, stating that there has been notable progress in recent years in terms of licensing requirements, which he expects will become more refined and effective as agencies gain experience in this area.
He also points out that while the government seems to be on the right track with the development and implementation of industry-specific rules, there are still considerable gaps when it comes to consumer awareness.
Although crypto and the expanding cohort of digital assets have been around for quite a while, they remain rather novel and complex technologies that many people are not familiar with.
This means that it will take a while for consumers to achieve a proper level of literacy and learn to engage with these products and services safely.
Furthermore, ASIC’s Enhanced Regulatory Sandbox (ERS) could prove instrumental in achieving a balanced environment that supports financial innovation.
The ERS is basically a program that lets certain companies test out innovative financial solutions for up to 24 months, without having to obtain an Australian financial services (AFS) license or Australian credit license.
Final thoughts
Australia is certainly not the only country struggling to develop strong policies and introduce clear legal provisions that could untangle the intricate digital assets web that’s been forming lately. This has been an issue that nations worldwide have been dealing with even since digital currencies started gaining ground in the financial system, making it clear that their influence is only going to rise in the long run.
Australia’s recent Key Issues Outlook report acknowledges this expansion and highlights the necessity for the right regulatory bodies to take action. With the right approach and strategies, Australia might be able to make notable advances in its technology policy and create a proper setting for sustainable growth in the future.
