The year 2021 was exceptional for crypto, as digital assets acquired more mainstream adoption thanks to their perks and growth potential. Cryptocurrencies are based on the decentralisation principle, which is a vital step toward democratising wealth by giving power to investors.
The Cryptocurrency Land in Australia
The financial freedom with cryptocurrency often comes at a high cost. In the crypto land, you can become an over-night millionaire by trading cryptocurrencies like Dogecoin or Bitcoin, but you also have to be prepared to risk losing all your money.
Since cryptocurrencies are unregulated, criminals are increasingly exploiting them for illegal purposes such as terror funding, money laundering and tax evasion. Because of these unlawful activities, numerous countries have either outlawed or tightly regulated cryptocurrencies and exchanges. According to a study released in November 2021 by the Law Library of Congress, 51 nations have either explicitly or implicitly prohibited cryptos.
China, Iraq, Bangladesh, Nepal, Algeria, Tunisia, Qatar, Egypt, and Morocco have all chosen to prohibit crypto trading and exchanges outright. Furthermore, most of the other 41 countries that have enacted crypto-regulation rules are in the Arabian Peninsula or Africa.
According to comparison site Finder, Australia ranks third in crypto adoption. Last year, the country said it would build a licensing framework for cryptocurrency exchanges and plan to launch a retail central bank digital currency. It has a 22.9% crypto ownership rate, followed by Indonesia (22.4%) and the Philippines (21.6Z%). And Bitcoin is the most popular crypto in Australia, with 72.7% of crypto owners owning this coin.
Australian Government’s Stance on Crypto
Australia seems to adopt a more positive stance on digital currencies than several other nations. Rather than overtly prohibiting cryptocurrency, Australia has decided to regulate it via new laws and rules. In this context, Australia intends to build a licensing framework for crypto exchanges as part of the most significant overhaul of its payment system and considers the introduction of a retail central bank digital currency.
In 2017, the Australian government declared crypto exchanges and digital currencies lawful, subjecting them to Section 5 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF 2006). According to the lawmakers, BTC should be classified as “property” and subject to Capital Gains Tax (CGT). This shift in tax policy demonstrates the Australian government’s progressive position on crypto.
In addition, the Australian Transaction Reports and Analysis Centre (AUSTRAC) issued stringent restrictions for cryptocurrency exchanges in 2018. As part of these rules, cryptocurrency exchanges operating in Australia must register with AUSTRAC following AML/CTF 2006 Part 6A – Digital Currency Exchange Register. And entities serving as exchanges or offering registrable exchange-type services must identify and authenticate their users and keep their records. They must also meet the government’s AML/CTF reporting requirements.
It should be borne in mind that the CEO of AUSTRAC maintains the Digital Currency Exchange Register. Should an exchange fail to register, it will be likely to face criminal charges and financial fines.
In a nutshell, while several nations have decided to prohibit cryptocurrencies and exchanges outright, Australia has not abandoned cryptos. This can lead to radical changes in traditional monetary transaction processes.