Planning or already invested in cryptocurrencies? Are you familiar with Australia’s cryptocurrency rules and regulations? We know you are aware that all innovations are accompanied by a feeling of excitement and, sometimes, dread. Cryptocurrency is no exception, and while some Australians have become informed of it, many are still unclear how it should be administered.
Interest and activity in cryptocurrency is rising, as seen in media publications, podcasts, and Facebook groups dedicated to the topic. And part of the attractiveness of cryptocurrencies like bitcoin for many investors and speculators is their decentralised structure.
However, from a regulatory standpoint, what does this mean? Today, we will take a look at the present regulatory situation of cryptocurrencies in Australia.
Is It Legal to Use Cryptocurrencies in Australia?
Cryptocurrency is lawful in most industrialised nations, but it is limited or outlawed in others, including China, Russia, Vietnam, Indonesia, Turkey, and Bolivia.
The Reserve Bank of Australia ruled cryptocurrencies lawful in 2017. This means that cryptocurrencies such as Bitcoin, Ethereum, Ripple, and Dogecoin are all recognised cryptocurrencies.
Cryptocurrency trades in Australia are subject to both Capital Gains and Income Taxes. The Australian Taxation Office (ATO) has established strict guidelines for the taxation of cryptocurrency in the country.
How Does It Get Taxed?
In 2017, Australia imposed a tax on cryptocurrency. When you sell, gift, trade, or exchange cryptocurrency, convert it to fiat money like AUD, or use it to acquire goods or services, you will be liable to capital gains tax (CGT).
The Australian Tax Office (ATO) does not consider cryptocurrencies to be money. It is instead treated as a ‘property,’ liable to capital gains tax (CGT). The market value of the cryptocurrency in Australian Dollars at the time of disposal is utilised to compute a capital gain or loss from crypto.
Bitcoin, in particular, is recognised as property by the government, which means it is liable to the nation’s capital gains tax. The same as other investments, including shares, managed funds, and property. Cryptocurrencies with features similar to bitcoin must likewise be considered as property. The aforementioned is regarded as a progressive regulatory stance to cryptocurrency investing.
What Rules Govern It?
Governments worldwide are split on regulating cryptocurrencies as it transitions from speculative investment to a balanced portfolio protege. But, countries have adopted various methods to holding crypto as it has become a more major element in the global investment scene.
The Australian Transaction Reports and Analysis Centre, or AUSTRAC, Australia’s financial intelligence agency, implemented new regulations in 2018 to combat illegal behaviour in the crypto realm. Its mission is to uncover concerns such as money laundering and tax fraud.
Cryptocurrency exchanges are required to register with AUSTRAC and comply with anti-money laundering and counter-terrorism financing compliance and reporting responsibilities under the Anti-Money Laundering and Counter-Terrorist Financing Act of 2006.
As a component of their Know Your Customer (KYC) procedures, cryptocurrency transactions must gather information about their clients’ identities. They must keep a close eye on transactional behaviour and detect malicious behaviour and not deal in cash transactions. In the previous year, AUSTRAC had registered 400 digital currency exchangers and terminated six of them.
Moreover, the Australia Securities Exchange and the Australian Securities and Investments Commission have been hesitant to allow exchange-traded funds connected to bitcoin to be listed, which has posed a problem for investors. A parliamentary inquiry is expected to look at the best ways to regulate cryptocurrencies.
There is no particular regulation dealing with blockchain or other distributed ledger technologies at the moment. De-banking, which occurs when traditional banks cancel the accounts of digital currency firms, has been a significant and ongoing issue that has prompted calls for legislation.
What’s Next for Australia’s Cryptocurrency World?
Crypto legislation is still growing, and to some extent, it is contingent on operators adhering to Australian laws.
According to the Australian Securities and Investments Commission (ASIC), consumers who trade cryptocurrency on unregulated platforms risk losing a lot of money. A Senate committee looks at various policy and legal measures Australia might adopt based on examples from Canada, Singapore, the United Kingdom, and the European Union. Further regulation is inevitable.
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