What are the Cryptocurrency Regulations in Australia? Image credit: AdobeStock
Generally, Australia is considered a considerably suitable and reliable jurisdiction for digital currencies, cryptocurrencies, and cryptocurrency exchanges to operate in. The Australian government legalised cryptocurrencies in 2017, and since then, the country has been progressive in enacting cryptocurrency regulations.
The Australian government has put in place cryptocurrency regulations that concern its exchanges. It’s a requirement for all cryptocurrency exchanges in Australia to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) under Part 6A of the AML/CTF 2006 laws.
This regulation implies that any agency operating as an exchange to purchase and sell cryptocurrencies bears particular responsibilities. They have an obligation to:
Failure to comply with these regulations makes cryptocurrency exchanges viable for criminal prosecutions or penalties. The AUSTRAC targets to avoid cryptocurrencies from being utilised to finance terrorism or money laundering using extensive validation procedures. This means it’s the responsibility of the cryptocurrency exchange provider to keep an eye on any dubious trading activity.
In May 2019, these regulations were then revised by the Australian Securities and Investments Commission (ASIC). The updated rules now required regulations for initial coin offerings (ICOs) and trading. Courtesy of the 2019 regulations, some ‘privacy coins’, a type of cryptocurrency created to be incognito, are today excluded from listed cryptocurrency exchanges.
Another key cryptocurrency regulation in Australia relates categorically to Bitcoin. For tax reasons, Bitcoin and other cryptocurrencies with similar attributes should be regarded as assets. Therefore, this regulation implies that Bitcoin and similar cryptocurrencies are subject to Capital Gains Tax, similar to any other asset. Prior to this change, the goods and services tax (GST) legislation subjected cryptocurrency to double taxation.
The other regulation that is precise to cryptocurrency exchanges requires all exchanges to get an Australian Financial Service (ASF) licensing. The regulation treats all digital currency providers equal to other financial service providers in the country.
Under the regulation, when exchanges sell crypto-assets such as tokens for investment, they have to categorise these assets as financial products as per the Corporations Act. This is useful as it safeguards consumers who have a guarantee that they’re purchasing licensed and regulated financial assets. Additionally, the regulation requires exchanges to provide consumers with pertinent information, including guidelines and fee structures.
If you’re considering purchasing cryptocurrency in Australia, ensure you purchase from a licensed cryptocurrency exchange with affordable and advanced financial services. By transacting with regulated cryptocurrency exchange providers, you are guaranteed that your investment is protected as it is with other financial services. In addition, it’s paramount to be mindful of the Capital Gains Tax obligation when purchasing and selling digital currencies. Otherwise, you risk receiving an unwelcome notification from the Australian Taxation Office (ATO).