It has been ten years since Bitcoin was first created in 2009 and the word cryptocurrency entered our vocabulary. Many people now recognise the terminology, however it is still not widely used for payment. Despite its slow uptake worldwide, Australia is a growing market for digital exchanges. With recent changes in taxation and a limit on cash payments, there is more incentive to go digital and to buy cryptocurrency in Australia.
Since 2017, the use of cryptocurrency has been legal in Australia. The government announced that Bitcoin and other cryptocurrencies with the same features were to be treated as property and subject to Capital Gains Tax (CGT). Previously cryptocurrencies had been subject to a double taxation under the Australia’s Goods and Services Tax (GST). The change in tax law demonstrates Australia’s progressive shift towards digital.
In 2018, new cryptocurrency exchange regulations came into place. The new rules require exchanges operating in Australia to register with the Australian Transaction Reports and Analysis Centre (AUSTRAC). The regulations are in place to prevent fraudulent activity, specifically ensuring compliance with Anti Money Laundering (AML) and Counter-Terrorism Financing (CTF).
The future of crypto in Australia looks ready to include Initial Coin Offering’s (ICOs). ICOs are essentially a cryptocurrency’s way of crowdfunding, that came into the public view in 2014. ICO’s have been banned in China and heavily criticised by the US regulators. Australia has been more open to the reality of the digital changes and released its set of guidelines around ICO’s in Oct 2017.
Alongside the changes for digital, a new law came into force on July 1st, 2019, making it illegal for businesses and individuals to make cash purchases for any products or services that cost more than AU$10,000. This law aims to encourage transition to a digital society and crack down on fraudulent crime. On the back of this, cryptocurrencies have actively started advertising to the Australian crypto community. They are anticipating the new law will make the crypto market rise. Crypto trading volumes are in turn expected to grow by more than 20%.
Two of Australia’s largest banks, Westpac and ANZ both allow the purchase of cryptocurrency with an account or credit card. They announced that customers can purchase Bitcoin and other digital currencies or accept them as a form of payment, so long as the transaction complies with the legislation. However, the largest bank in Australia, Commonwealth Bank of Australia (CBA) stopped digital currency purchases via credit card back in 2018. It does still allow them to be bought and sold via their account or debit card.
Australia may not be the biggest market for crypto, but it is certainly a progressive one. The regulations have been enforced not to stifle the market, but to protect citizens and the finance industry and pave the way forward for digital currency. According to the HiveEx study in 2018 the popularity of Australians owning crypto went from 5% at the start of the year to around 13.5% in August.
Australia is one of the few countries that has actively started building its own cryptocurrency regulations to suit the needs of its citizens and financial institutions. Accepting the changing landscape of the way we deal with financial transactions and how we use technology to enable positive change. Australia is paving a smoother transition towards the inevitability of digitalisation with its forward-thinking rules and guidelines.