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In Australia, the laws and regulations surrounding cryptocurrency are on a perpetual review by the government as it opens doors to financial, technology innovation, or fintech. For that reason, the business community is moving toward integrating cryptocurrency into the payment systems.
Several regulatory bodies, such as the Australian Securities and Investment Commission (ASIC), have been put to task for developing frameworks and guidelines to ensure that cryptocurrency transactions adhere to the laws of the land.
The consideration of imposing rules and regulations follows a recommendation review released by a select committee to assess the technology and financial center report. The primary goal was to introduce necessary regimes to cover cryptocurrency transactions, including anti-money laundering and Counter-terrorism Financing (AML/CTF) plus tax.
However, the Australian government’s imposition of laws and regulations through the Reserve Bank of Australia (RBA) does not approve cryptocurrency as legal tender. It only opens opportunities for businesses to have a competitive edge and participate in the world market.
So, it’s best to research and learn the government provisions for investing in cryptocurrency and other digital assets. You can consult the cryptocurrency community in Australia or visit website for more information.
Below are some of the considerations highlighted by Australia’s laws and regulations on cryptocurrency.
The Australian government’s point of concern is on the transactional use of cryptocurrency within and outside the country and not the digital currency technology itself. So far, no discrete laws are available to control the underlying technological innovation except for the application or uses of cryptocurrency.
In that connection, the following are regime considerations that affect cryptocurrency in Australia:
Corporations Act 2001
Cryptocurrency and other digital currencies are assets and can change hands as financial products. The corporations’ act will apply to businesses and companies using digital currencies for payment systems.
So, the Corporations Act affects cryptocurrency custody, scheme property’s safekeeping, and safekeeping for financial products. The two provisions are mandatory minimum requirements for cryptocurrency holding and administration of assets.
National Credit Consumer Protection Act 2009 (NCCP Act)
Lending activities surrounding cryptocurrency have also caught the attention of ASIC. Consequently, statutory requirements for those engaged in credit services take effect under the NCCP Act.
So, an Australian credit license is a must-have for entities looking to participate in the upcoming financial market. A special exemption can apply if the parties involved qualify under the same provision; however, deliberation is ongoing since the exemption scope is unclear.
Sales Of Cryptocurrency
Australia has a regime that regulates financial services, and they apply for cryptocurrency and other digital assets. Here’s the breakdown:
Registrations And Licensing
The existing law allows businesses within the Australian territory to take precedence over cryptocurrency. So, the expectation is that everyone using cryptocurrency must obtain licenses and disclose requirements as per the financial services legislation.
Such control measures comply with the Anti-money laundering and counter-terrorism financing act of 2006. Therefore, financial services entities must adhere to the requirements needed to operate in Australia.
Cryptocurrency marketing should follow the consumer protection requirements as prescribed in the Corporations act, whether coins or tokens. Entities should provide information to investors to assist with decision-making when looking to acquire cryptocurrency.
Classification Of Cryptocurrency
The decentralized nature of cryptocurrency creates confusion on how to treat technological innovation. The regulatory bodies are yet to decide where cryptocurrency falls in the control spectrum.
Australia securities and investments commission Act 2001 can only apply when you consider cryptocurrency as a financial product. On the other hand, treating the underlying cryptocurrency as a consumer product will call for Australian competition and consumer commission.
It’s unclear which laws and regulations can take effect since the government is yet to clarify how to treat all the classifications of cryptocurrencies.
The Australian Tax Office (ATO) has been collecting data for everyone participating in the cryptocurrency market since 2014. It follows tax compliance requirements imposition of the exchanges running cryptocurrency businesses and the regular taxation on Australians.
However, taxation of cryptocurrency and other digital assets has two approaches depending on your intentions or setup. The income tax bracket captures cryptocurrency used in specific transactions, or capital gains tax (CGT) is applicable if ATO views it as digital assets.
Anti-money Laundering and Counter-terrorism financing act 2006 (AML/CTF Act) plays a massive role at the border points of Australia. Visitors have a declaration requirement when carrying large sums of money that are more than USD$10,000.
The intangible nature of cryptocurrency makes it hard to enforce (AML/CTF Act) since there are no laws or regulations that provide the declaration requirements. So, no restrictions are available at the port of entry or when exiting Australia.
The cryptocurrency laws and regulations in Australia are still in the works as the legislation is looking for ways to accommodate it in financial services. Investors and traders can still access the opportunities available in the new market but within the existing regulatory regime.
In the meantime, the Reserve Bank of Australia clearly states that cryptocurrency is not a legal tender and warns about the associated risks.