Australian Securities & Investments Commission (ASIC) chair Joe Longo warned it could only protect investors who buy "defined financial products" and that therefore crypto investors are "on their own".
Speaking during the AFR's Super & Wealth Summit, Longo said the demand-driven rush of crypto has proven difficult for financial advisers to offer counselling to clients.
"The demand-driven nature of the rush into crypto has thrown up some unique challenges. At present many, crypto-assets are probably not 'financial products', making it difficult for financial advisers to offer counsel," Mr Longo said.
For the most part, for now at least, investors are on their own,"
"So, what can they do when clients are banging down the door wanting to divert their savings into Ethereum or Dogecoin, a currency originally conceived as a joke?
"ASIC has already provided some guidance on exchange-traded funds linked to crypto-assets — they at least are financial products, and traded on a licensed exchange, so there will be some protections there. But for the most part, for now at least, investors are on their own," he said.
Longo also said investors should look at cryptocurrencies with "great caution" due to the lack of certified advice over the emerging technology.
"The implications for consumers are potentially huge. It is almost an article of faith that no one should invest in something they don't understand,' he said.
"Who among us can say they really understand crypto-assets and cryptocurrencies?" he asked.
However, Australia's Commonwealth Bank (CBA) separately announced it would trial trading bitcoin and other assets.
CBA customers will be able to trade Bitcoin, Ethereum, Bitcoin Cash and Litecoin via its 6.5million-user banking app as part of a pilot exercise.
Meanwhile, in Japan around 70 firms, including three of the country's biggest banks, said it intended to launch a yen-based digital currency in 2022 after trials in the next quarter, Kazuhiro Tokita, chief executive of cryptocurrency exchange DeCurret which is leading the consortium, said on 23 November.
The three bank are Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group.