Australia is experiencing a digital transformation across all economic sectors, and legislation must stay up and adapt to the crypto asset industry. The crypto industry is mostly unregulated, and the Australian government is trying to embrace new and creative technologies and protect Australian investors.
Professor Barney Tan, the head of the School of Information Systems and Technology Management at UNSW Business School, asserts that Australia has forward-thinking and action-oriented regulators that strive to do the right thing in an ecosystem of developing technologies and innovations. Australia has opted to regulate crypto by introducing new laws and rules, establishing favourable circumstances for crypto exchanges in the nation.
Australia adopts a crypto-friendly stance.
According to Finder, Australia ranks third in crypto adoption and is more bullish about digital currencies than many other nations. Australia has the highest percentage of cryptocurrency ownership at 22.9%, followed by Indonesia (22.4%) and the Philippines (21.6%). And 65.2% of crypto owners hold Bitcoin, the most popular cryptocurrency in Australia.
Australia crypto adoption. Image: Finder
As stated earlier, Australia has opted to regulate cryptocurrencies by introducing new laws and rules instead of outrightly banning them. In this regard, Australia intends to build a licensing framework for cryptocurrency exchanges and introduce a central bank-issued digital currency for retail use as part of the most extensive overhaul of its payment system.
The Australian government legalised crypto exchanges and digital currencies in 2017 and subjected them to section 5 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF 2006). The legislators argued that Bitcoin should be considered “property” and subject to Capital Gains Tax (CGT). This shift in tax status demonstrates the progressive position of the Australian government on cryptocurrencies.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) developed stringent laws for cryptocurrency exchanges in 2018. As part of this legislation, Australia-based crypto exchanges must register with AUSTRAC under AML/CTF 2006 Part 6A – Digital Currency Exchange Register. Entities such as crypto exchanges or offering registrable exchange services must identify and verify their users, maintain records, and comply with AML/CTF reporting requirements.
Australia initiated plans in March 2022 to create a retail central bank digital currency (CBDC) and has worked with Singapore, Malaysia and South Africa to release a CBDC pilot for international transactions. This forward-thinking approach to blockchain and Web3 facilitates the development of solid ties between engineers, investors, and government officials. Australia acknowledges that crypto assets will likely play a vital part in the future of finance, as seen by the rising demand for crypto services in the country.
Andrew Bragg, an Australian Liberal Party senator from New South Wales, has declared that it is time for the crypto industry to emerge from the shadows. Touching on the spectacular collapse of Terra, he offered a draft of a bill that primarily targets stablecoin issuers. Before distributing products to consumers, they must get a licence from regulatory organisations. In addition, these companies were required to hold local and foreign reserves to pay customers in the case of a financial crisis.
Benefits of crypto regulations for investors
Many believe that further regulation of cryptocurrencies will harm trading volumes and prices, impede innovation in the nascent space, and cause industry participants to move to less strict jurisdictions regarding regulating the traditionally decentralised crypto field. However, these fears are unjustified, and more regulation might rid the business of unscrupulous actors and foster trust, fostering industry expansion.
Specifically, investors and corporations can benefit from increased protection for their cash. As previously stated, crypto exchange platforms in Australia must register with AUSTRAC under AML/CTF 2006, retain user data, and comply with AML/CTF reporting duties. For instance, when you buy Bitcoin and Ether and thousands of coins on CoinSpot, you will rest assured thanks to its ISO 27001 accreditation, AUSTRAC registration and other features enabling it to pass an external audit by SCI Qual International.
CoinSpot strictly adheres to data security regulations. Source: Coinspot
In addition, there are concerns over the potential tax ramifications of new Australian regulations and how they could affect the amount of Capital Gains Tax (CGT) that investors and traders must pay on their exchanges. However, the Australian Taxation Office (ATO) has already taxed this form of financial instrument and tracked crypto transactions for years. As cryptocurrencies like Bitcoin have been regulated and taxed for some time, nothing has changed for investors in established crypto assets.
Closing words
The future of digital assets in Australia is bright, and more individuals are expected to pursue investment possibilities and diversify their portfolios. The government’s laws are advantageous for striking a balance between encouraging emerging technologies and making crypto exchanges more secure to safeguard Australian investors and traders.
