Crypto regulations is always a matter of concern in most of the countries. Some of the regions have fully regulated cryptocurrency laws, while some are on the verge of regulation. Moreover, there are even some regions where crypto is totally a banned subject. However, Australia is one such region where cryptocurrency is totally regulated and fully accepted. In this article, I further bring to you cryptocurrency regulations in Australia. Let’s dive in to know more.
In Australia, the regulations for cryptocurrencies are moving in the right direction. Even the general public of the country has accepted latest legislation. These laws are protective for crypto investors and consumers both.
The laws also provide legal certainty to businesses related to blockchain. The Australian government has balanced the blockchain innovation and adoption smartly. Let us take a look at the regulations of the Australian government for ICOs, tax treatment for cryptocurrency and crypto exchange.
Current Laws Formed by AUSTRAC
AUSTRAC or Australian Financial Intelligence Agency has implemented cryptocurrency regulations in April 2018. This is an anti-money laundering and financial intelligence agency in Australia. The AML/CTF (anti-money laundering and counter-terrorism financing) regulation covers bitcoin and cryptocurrency service providers.
In December 2014, Australia finalized a report for taxation for digital currency. As per the ruling, various potential taxes like capital gain tax, good and service tax or GST, transaction tax and income tax may be implemented on digital tokens. Like GST will be applicable to cryptocurrency just to avoid double taxation issues.
Consumer Protection and Financial Regulation
To avoid any fraud in digital currency transactions, RBA has stated that there will be only limited use of cryptocurrency. It is not a competition or equivalent to money. Further, as per a report of ASIC or the Australian Securities and Investment Commission, the committee will not treat the digital currency as a financial product. Another part of the report states that the currency has fewer safeguards and its value may also fluctuate in the future.
Committee also made it clear that though the digital currency is a financial product, still the tokens will have the provisions of general consumer protection. Chapter 5 of the report states, how digital currency can be used for making payments?
Licensing Requirements and Ownership
There is no as such explicit restriction for the investment managers of the cryptocurrency owners. However, the investors may have to follow the regulations of the financial services of Australia to hold or deem cryptocurrency. The Australian government is also taking an interest in robotic advice as well. In this Digital Advice technology, financial advice is provided automatically to the users without any human intervention.
Mining of Cryptocurrency
So far, Australia does not restrict cryptocurrency mining. However, it applies some taxation to mining activities. The miners have to pay tax for any gain or profit achieved through the bitcoin mining activity. The miners registered under GST have to pay GST for mining activity. As per GST legislation,
- Bitcoin is a security derivative & a digital currency.
- The supply of digital currency is not a taxable entity.
- Any miner whose GST turnover is around $75,000 has to file GST.
- If the turnover does not cross $75,000 then GST will not be applicable.
Latest Amendments and Future Regulations
In 2018, AUSTRAC or Australian Transaction Reports and Analysis Centre has announced more robust laws for cryptocurrency exchange. As per these regulations, the exchange should be registered with AUSTRAC. Moreover, the exchanges should be verifiable and comply with government AML/CFT reporting obligations. Moreover, the unregistered exchanges are criminal exchanges.
ICOs of Australia have scrutinized the ASIC guidelines, issued in 2017. As per those guidelines issued in 2017 the security and utility of the tokens will determine the treatment of the currency. The security risks can be mitigated easily by registering the currency under AUSTRAC. The relevant provisions came into place in April 2017.
As per ASIC, ICO is a high-risk speculation investment. The investors easily come to know whether the ICO issuer is registered under Australian regulations or not.
Our Take on Cryptocurrency Regulations in Australia
To summarise the cryptocurrency regulations in Australia; the country is well ahead than most of its peers. Australia has well-regulated cryptocurrency laws. Crypto exchanges are adopted and encouraged in the country. Also, the Australian Government is constantly working towards creating a safe & better place for the crypto community.