Australia’s primary corporate and financial services regulator has listed regulatory gaps around crypto firms as a key risk for this year.

In its Key Issues Outlook released Monday, the Australian Securities and Investments Commission said fast-growing crypto, payments, and AI players operating at the edge of regulation are exposing consumers to unlicensed advice and misleading conduct.

ASIC Chair Joe Longo said the agency is tracking “major shifts across Australia’s financial system as pressures on consumers, markets and businesses intensify,” while global regulatory settings diverge, “creating growing fragmentation that makes compliance more complex and increases the risk of uneven consumer protections.”

The warning comes as Australia works to address regulatory gaps through comprehensive licensing legislation proposed by the government in November.

The Corporations Amendment (Digital Assets Framework) Bill 2025, which the government says could unlock $24 billion in annual productivity gains, is intended to establish the country’s first regulatory framework for businesses holding digital assets on behalf of customers, requiring platforms to obtain an Australian Financial Services Licence.

ASIC noted that while some businesses legitimately operate outside current regulations, “some entities will actively seek to remain outside regulation, contributing to perceived regulatory uncertainty,” making clarity on licensing requirements and perimeter oversight critical priorities for 2026.

Clarity still elusive

“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, told Decrypt.

“At the same time, Australia needs to think seriously about how it encourages experimental innovation,” Allen noted.

“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,” James Volpe, founding director of Melbourne-based Web3 education firm uCubed, told Decrypt.

“I believe we’re on the right track and that the frameworks are becoming clearer,” Volpe said, warning that gaps in awareness and understanding persist across the industry.

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

Meanwhile, Allen noted that the independent review of ASIC’s Enhanced Regulatory Sandbox is an opportunity to move toward a more open “safe-harbour model,” where innovators are “presumed free to experiment unless regulators intervene.”

ASIC’s Enhanced Regulatory Sandbox is a testing environment that allows eligible businesses to test certain financial services and products for up to 24 months without holding an Australian Financial Services Licence, subject to specific conditions and consumer protections.

“2026 will be a decisive year for Australia’s technology policy,” he said, as major reforms on digital platform competition and AI regulation move forward, adding that “how regulators treat technology companies will shape Australia’s growth trajectory for decades.”