On July 1st of last year Australia acknowledged Bitcoin and other cryptocurrencies as legal tender, and now the country is currently working on plans to regulate cryptocurrency through implementing exchange regulation and licensing, and taxation. Australia is a growing market for cryptocurrency, ranking 14th worldwide for Bitcoin (BTC) volume by currency at AUD $2,810,190 or 276 BTC during a 24 hour time period.
On April 11th, the Australian government and the Australian Transaction Reports and Analysis Centre (AUSTRAC) announced the new rules in place for cryptocurrencies which will attempt to prevent money laundering and terrorist financing through the use of cryptocurrency. Nicole Rose, the CEO of AUSTRAC, added that “the regulation will also help strengthen public and consumer confidence in the sector.” The main rule requires that all digital currency exchanges (DCEs) located in Australia comply with all of the government’s anti-money laundering (AML) and counter terrorism financing (CTF) laws and must register with AUSTRAC by the deadline of May 14th. So far, the three exchanges; BTC Markets, Independent Reserve and Blockbird have registered with more expecting to follow suit.
In order to keep track of the taxable growth and expenditure of cryptocurrencies, the Australian Tax Office (ATO) will be utilizing data matching and 100 point identification checks to gather data on anonymous cryptocurrency markets and to keep an eye on cryptocurrency investors. In the past, Australia has taxed cryptocurrencies, however on September 20, 2017 it was announced that the double tax on cryptocurrencies would be removed. Initial coin offerings (ICOs) are another form of cryptocurrency exchange that has been heavily criticized by financial regulators such as the Securities and Exchange Commission (SEC) in the USA. After ICOs were banned in China in September 2017, the following month Australia announced guidelines for ICOs which state that sales of ICOs are to be classified under Australian consumer law in which ICOs cannot offer any financial products.
While Australia’s new rules can be seen as intimidating for cryptocurrencies, not only do the rules allow the government the ability to fight money laundering and terrorist funding while monitoring cryptocurrencies to protect its citizens, but they also provide the potential for the cryptocurrency market to flourish and be accepted in society. James Nguyen, Australian cryptocurrency writer for Forbes, explained that Australia took the time in making these new rules, keeping in mind that cryptocurrencies have evolved and exceeded old regulations by introducing new regulations since the use of cryptocurrencies is not expected to fade away. Nguyen has stated that “By investing resources in research and new legislation, Australia’s government shows its commitment to the perceived longevity of cryptocurrencies.” Loretta Joseph, chair of the Australian Digital Commerce Association (ADCA), also showed her support by stating that the government worked together with her company in order to “bring clarity and oversight to an industry that needed guidance and formal regulation in order to allow industry players to adhere to standards.”
While some countries and banks are still against the use of cryptocurrencies and have strict regulations against it, if cryptocurrency is accepted and users fully comply with laws and regulations, it can greatly impact the financial market. Ryan Taylor, CEO of cryptocurrency DASH, believes that rules similar to Know Your Customer (KYC) and AML rules that are being implemented in Australia are the means which can prompt cryptocurrency to move further. Taylor expressed his hopes that, in the future, cryptocurrencies will be accepted worldwide as a fast payment system and believes that, with the implementation of Australia’s new rules, other countries will follow the same path. However, while Arnold Spencer, Coinsource general counsel and former attorney for the US Department of Justice, agrees that Australia is taking the proper steps forward for cryptocurrency, worldwide acceptance is impossible to reach unless all countries are on the same page. Brazil, for example, has already announced that they will likely not be following Austrilas’s example. Ilan Goldfajn, Brazil’s Central Bank President, believes that cryptocurrency is not safe to be used as an exchange of value because it has no stability and is more of a risk rather than an asset because it does not have the support of a central bank. Regardless, with the implementation of the new rules and regulations, Australia is one step closer to creating a system where cryptocurrency can thrive which is a clear advantage to other countries that are still unsure.
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