Regulators and retirees clash in Australia’s crypto crossroads

Australians continue to experience regulatory and operational challenges in the digital asset space, despite the nation's ongoing progress in cryptocurrency adoption and innovation. Recent court rulings and financial behavior patterns highlight the persistent friction between evolving digital assets and traditional financial frameworks. These developments suggest that the journey toward seamless integration of crypto into mainstream finance remains complex.

A landmark legal decision emerged in late 2025, when the Federal Court of Appeal in Australia rejected the Australian Securities and Investments Commission's (ASIC) appeal against the Finder Wallet ruling. The court upheld the primary judge’s decision that Finder's "Finder Earn" product did not constitute a "debenture," thereby exempting the company from requiring an Australian Financial Services License (AFSL). The court reasoned that customers exchanging fiat for stablecoins did not amount to a deposit or loan, and therefore no "undertaking to repay" existed. Additionally, the court ruled that TrueAUD, despite being pegged 1:1 to the Australian dollar, was not equivalent to fiat money but instead a form of property with distinct rights. This judgment offers clarity for providers of similar products, although the industry awaits updated regulatory guidance from ASIC and the government's proposed licensing framework for digital assets [1].

Meanwhile, data from the Australian Taxation Office (ATO) reveals a subtle but noteworthy shift in Australian Self-Managed Super Funds (SMSFs). Despite a broader crypto market rally, SMSF crypto holdings declined by 4% year-on-year, dropping to $1.97 billion in June 2025 compared to $3.12 billion in June 2024. The decline occurred even as Bitcoin surged by 60% over the same period. Simon Ho, head of SMSF strategy at Coinstash, noted that the data is based on end-of-year filings, which may not fully reflect current holdings. When compared to 2023, SMSF crypto holdings increased by 41%, aligning with growing public interest in crypto investments, especially among younger Australians [2].

SMSFs remain largely managed by older Australians, with 96.7% of members aged over 35, and the largest age group being those between 75 and 84 years old. However, younger demographics—particularly those aged 25 to 34—account for 53% of crypto ownership in Australia, according to Independent Reserve. This generational divide raises questions about how the future of SMSF investing might evolve as younger Australians enter retirement planning stages. The growing demand is also prompting major crypto exchanges like Coinbase and OKX to expand their SMSF offerings in Australia, signaling broader industry confidence in the market [2].

The persistent friction in Australia’s digital asset landscape is not solely legal or regulatory. Technological challenges also remain a significant barrier. A recent analysis in Retail Banker International highlighted the limitations of blockchain confidentiality, particularly in financial services. Public blockchains, while efficient and transparent, expose sensitive data such as transaction histories and wallet balances to public scrutiny. For private banks and wealth managers, this lack of confidentiality is a critical drawback. In response, there is growing interest in privacy-preserving technologies such as Fully Homomorphic Encryption (FHE), which allows encrypted data to be processed without decryption. FHE could enable confidential transactions on public blockchains, but adoption remains limited due to performance and accessibility challenges [3].

Industry players and regulators alike are now at a crossroads. While the Finder case offers regulatory clarity for certain products, broader legislative action remains pending. At the same time, SMSF investors are navigating a volatile and rapidly evolving market, and institutional players are investing in infrastructure to accommodate a future where crypto may play a larger role in retirement planning. With global trends showing increasing acceptance of crypto in retirement strategies—such as recent executive orders in the U.S. and surveys in the U.K.—Australia's ability to adapt will be crucial in maintaining its competitive edge in the global digital asset economy.

Source:

[1] Australia: Crypto in the Courts – ASIC v Finder Update (https://www.fintechlawblog.com/2025/09/02/australia-crypto-in-the-courts-asic-v-finder-update/)

[2] DIY retirement savers in Australia trim crypto nest eggs by 4% (https://cointelegraph.com/news/crypto-investment-australia-retirement-funds-ato)

[3] Blockchain confidentiality problem is holding back banking (https://www.retailbankerinternational.com/comment/why-blockchain-confidentiality-problem-is-holding-back-banking/)