Cryptocurrencies have proved that they’re the best forms of currency that offer security and reliability to their customers. They also prove that there’s no future of a financial world without them being involved.
Industries across the globe are already moving to the alternative payment methods, including the blockchain technology. Australian industries certainly are part of this trend, starting from Australian online slot games here to Australia’s biggest online retail store Myer.
However, cryptocurrencies have also shown that they don’t really go along with government regulations, limitations, and in general, centralized systems of oversight. Their very nature of anonymity trumps anything related to government control. This was particularly true when cryptocurrencies were still behind the spotlight. Nobody thought that Bitcoin would gain such popularity that it would be a subject of concern.
But nowadays, the blockchain-based currency is slowly replacing the conventional methods of payment; its mainstream adoption has increased and more and more individuals are entering the market. Therefore, governments have started to think about how they can control the new industry.
Australia is one of these countries that have already devised a plan for regulating cryptocurrencies. In this article, we’ll take a look at some areas where crypto-related regulations have been enacted by the Australian government. But first, let’s talk about what the Australian currency market looks like.
Australia is certainly not the biggest market for Bitcoin (BTC) and its analogous cryptocurrencies. Nevertheless, it’s an increasing one ranked 14th globally by its current Bitcoin volumes.
In 2018, the country had a production rate of 276 Bitcoins per day, which is equal to 2,810,190 Australian dollars. To put it into perspective, Japan is the world’s biggest Bitcoin produces with its 60% share of the whole market. The country produces 301,404 BTC over a 24-hour period.
Japan’s market activities dwarf Australian cryptocurrency endeavors, however, in terms of the global reach, the country is still considered one of the biggest players (again, the 14th place worldwide).
Government regulations and licenses
Australia has voiced its preparedness to regulate cryptocurrency markets and make them more welcoming to the purchasers. But to be clear, the country has also acknowledged that the future of finances lies in cryptocurrencies and the only reason why they’re trying to license the players is to give them general directions. This way, the market will be more stable and have better longevity.
With that being said, here are some of the regulations enacted by the Australian government:
In April, last year, the Australian government announced that they have devised a plan to implement new rules related to cryptocurrency exchanges. The biggest regulatory plan was that if the currency exchange was taking place and was registered on Australian soil, it had to be registered with AUSTRAC (Australian Transaction Reports and Analysis Centre) and meet AML/CTF (Anti-Money Laundering/Counter-Terrorism Financing) compliance and reporting obligations.
The AUSTRAC has already licensed three exchanges: Melbourne-baced BTC Markets, Blockbid that’s also based in Melbourne, and Sydney-based Independent Reserve.
As it’s stated in the government announcement, the goal here is to eliminate risks of cryptocurrencies being used in money laundering and terrorism funding. But the report also states that “regulations will also help strengthen public and consumer confidence in the sector.”
Another important area where the government gets involved in the cryptocurrency market is taxation. There was an initial plan devised by the government to impose double taxation on the digital currency.
However, in September 2017, it was announced that the government would be repealing the initial law. It eventually ended the taxation of the purchase of Bitcoin and other cryptocurrencies.
Initial Coin Offerings (ICO) has also been under government scrutiny not only in Australia but other developed countries as well. For example, the Securities and Exchange Commission in the USA has heavily criticized the ICOs, while in China ICOs are outright banned.
In 2017, the Australian Securities and Investments Commission (ASIC) launched its own set of regulations regarding the ICOs. According to these guidelines, token sales are categorized under general Australian consumer law, given that the ICO structured company is not offering financial products, as this will be regulated under the country’s Corporations Act.
Australia wants cryptocurrencies
With these recent legal developments regarding the cryptocurrencies, it is obvious that the Australian government wants to incorporate the blockchain-based currencies in its economy and by regulating it, create a safer space for more reliable transactions.
In fact, the country has followed Japan’s lead by declaring Bitcoin – along with analogous cryptocurrencies – as legal currency in 2017. It means that businesses that are based on the cryptocurrencies will be able to better operate in the country.
Australia has acknowledged that there’s a lot of potential to the cryptocurrencies. By encompassing blockchain technology, as well as financial upgrades with digital tokens, they are setting themselves up almost like the ‘first-to-market.’ If Australians can create a legal system that will be effective in their own environment and won’t be destructive to the Australian crypto-businesses, they’ll create a precedent of government-blockchain embeddedness that could be exemplary for other countries.
Giorgi is a news reporter and financial analyst at www.forexnewsnow.com He has 3 years of experience in analyzing the financial markets of Forex and cryptocurrencies. He also likes making hidden jokes in his articles.