Australia Flags Crypto Regulation Gaps as Major 2026 Risk – What Happens Next?

The Australian Securities and Investments Commission (ASIC) has identified regulatory gaps in digital assets and fintech as a major priority risk for 2026, warning that rapid innovation in cryptocurrency, payments, and AI sectors continues to expose consumers to unlicensed advice, misleading conduct, and unclear regulatory boundaries.

In its newly released “Key Issues Outlook 2026” (published January 27, 2026), ASIC highlighted how some entities deliberately structure operations to remain outside existing regulations, exacerbating “perceived regulatory uncertainty.” This leaves investors vulnerable to fraud, hacks, market manipulation, and inadequate consumer protections amid growing crypto adoption. The report groups digital assets with emerging fintech participants operating on the “regulatory perimeter,” where oversight remains fragmented despite increasing activity in decentralized finance, stablecoins, and tokenization.

ASIC Chair Joe Longo emphasized that while some businesses legitimately fall outside current rules, others actively evade them, underscoring the need for clearer licensing requirements and stronger perimeter enforcement in 2026. The regulator noted that it is for the government to decide on expanding the regulatory framework, but ASIC will prioritize maintaining effective supervision.

The concerns align with ongoing government efforts to close these gaps. The Corporations Amendment (Digital Assets Framework) Bill 2025 proposes requiring digital asset platforms and tokenized custody providers to hold an Australian Financial Services Licence (AFSL), imposing conduct, disclosure, custody, and consumer protection obligations. Complementary measures include ASIC’s updated guidance (INFO 225) on when digital assets qualify as financial products, and temporary “no-action” relief for certain providers until mid-2026 to allow compliance transitions.

Industry stakeholders welcome clearer rules to build trust and protect users but warn that overly burdensome requirements could push innovation and firms offshore. Balanced regulation is seen as essential to harness blockchain’s potential while mitigating risks.

Looking ahead, lawmakers are expected to advance crypto-focused legislation in 2026, potentially including enhanced exchange oversight, stablecoin rules, and enforcement powers. Until reforms pass, risks remain elevated. Experts advise investors to use licensed platforms, conduct due diligence on projects, and stay informed about regulatory developments to navigate the uncertainty.