The Regulatory Landscape for Cryptocurrency Platforms in Australia
Cryptocurrencies such as Bitcoin, Ethereum, and Ripple have seen a meteoric rise in popularity in Australia over the past year or two, with more and more people investing in digital assets like these. Yet with such rapid growth comes an increasing need for regulation – which will be explored in this article, including its current state, challenges faced by regulators, and prospects for further development in cryptocurrency regulation.
Regulation in the Current Situation
Currently, cryptocurrency platforms in Australia such as Cointree, are not subject to specific regulations but must abide by existing financial standards such as anti-money laundering (AML) and counter-terrorism financing (CTF) laws.
The Australian Securities and Investments Commission (ASIC) has stated that some cryptocurrencies may be classified as financial products under the Corporations Act 2001; however, this determination is made case by case, depending on the features of each cryptocurrency.
The Australian Taxation Office (ATO) recently guided the tax treatment of cryptocurrencies, stating they are considered assets for taxation purposes and subject to capital gains tax (CGT) if sold or exchanged.
Challenges Awaiting Regulators
One of the primary difficulties regulators in Australia face is the rapidly evolving cryptocurrency industry. It can be hard for them to stay abreast of technological advancements. At the same time, their decentralized nature makes it hard for them to detect or monitor illicit activities such as money laundering and terrorist financing.
Another challenge is the need for international coordination on cryptocurrency regulation. Cryptocurrencies are global in scope, so regulations in one country can affect industries elsewhere. Without coordinated regulation, businesses may relocate to countries with more lenient rules.
Regulation of Cryptocurrencies Regulation Outlook
Regulators in Australia face numerous challenges, but there is evidence that cryptocurrency regulation may increase in the coming years. In 2018, they established a task force to investigate cryptocurrency regulation, with an expected report due in 2020. However, this report has yet to be released. It will provide recommendations for controlling the industry.
In November 2019, the Australian Transaction Reports and Analysis Centre (AUSTRAC) issued new guidance regarding anti-money laundering/counter-terrorist financing obligations for cryptocurrency exchanges. This guidance requires cryptocurrency exchanges to register with AUSTRAC, verify their customers’ identities, and report suspicious transactions.
In March 2020, the Australian government passed new legislation to tighten anti-money laundering/counter-terrorist financing laws and extend them to cryptocurrency exchanges. This requires cryptocurrency exchanges to adhere to the same AML/CTF obligations as traditional financial institutions, including customer due diligence, monitoring, and reporting suspicious transactions.
Conclusion
Australia’s regulatory landscape for cryptocurrency platforms is currently in flux. Although certain regulations already apply to them, no specific regulation exists for the industry. There are indications. However, that regulation could increase, with government and regulators looking into ways to guarantee safety, security, and transparency within this space.
As the industry develops, regulators must balance innovation and consumer protection. Cryptocurrencies offer tremendous promise but also present unique risks and difficulties. By working closely with the sector, regulators can guarantee that the benefits of cryptocurrencies are realized while minimizing their associated risks.