Australia has a somewhat stable and neutral jurisdiction for cryptocurrency. The minimal intervention approach to crypto regulations in Australia by the Aussie government has significantly contributed to the country’s crypto atmosphere increase.
Source @ pymnts.com
A recent ASIC (Australian Securities and Investments Commission) survey found that crypto is the second highest financial product held by Aussies after Australian shares. And with more than one million Aussies owning at least one crypto (according to Roy Morgan research), an unregulated and volatile crypto industry poses some risks for users, especially with the recent FTX collapse.
According to data from the ASIC survey, only 20% of Aussie crypto owners considered their investment risky – This has raised concerns about educating Australian investors about cryptocurrency risk. Also, there have been calls by some economists for concrete crypto regulations in Australia, which has long been on the county’s regulatory body’s agenda.
In 2021, the Australian government’s regulatory efforts on the crypto sector took a new direction – as the government considered recommendations for clarified crypto regulations. ASIC released its 2022–2026 corporate plan highlighting crypto assets as a major focus.
The Australian Securities and Investments Commission indicated it would support the creation of an efficient regulatory framework for cryptocurrency assets, especially on market integrity and consumer protection.
Here’s Australia’s current Crypto regulation outlook
Since late 2021, crypto regulation has seen some progress in the country. They include:
- Taxation of crypto assets
The Australian government said it would remove crypto assets belonging to Aussies from foreign currency tax arrangements. The government confirmed in its 2022-2023 federal budget that it would treat cryptocurrency as an investment asset which is subjective to capital gains tax (CGT).
The above means crypto investors can track their transactions, including when they purchase, trade, sell, or gift crypto, to help determine if they earn gain or loss.
2. Token mapping
The Australian government’s attempt to set a framework for crypto regulation focused on “Token mapping” (a way of categorizing digital assets to determine how they should be regulated.)
The token mapping concept started in August 2022 when the government announced it commences stakeholders’ consultation on a crypto regulatory framework. And its first work will be to prioritize a token mapping exercise for better-informed regulation.
Australian government believe Token mapping will help in regulating crypto in many ways: like defining different digital assets and identifying notable gaps in the regulatory framework; helping in-progress work on a licensing framework; reviewing innovative organizational structures; looking at custody obligations for third-party crypto assets custody, and providing additional consumer safeguards.
3. Regulating custody and exchange arrangements
The government is also introducing a custody regime for digital assets and licensing for crypto exchanges. The FTX’s collapse influences the policy, making Cryptos fall within the scope of Australia’s financial service regulatory regime.
Also, crypto lending activities and other relevant entities will hold an Australian credit license; otherwise, they will not be able to operate.
4. Blockchain or other distributed ledger technology (DLT) requirements
Currently, Australia has no specific regulatory body dealing with blockchain or distributed ledger technology (DLT). However, ASIC has maintained that businesses providing financial and consumer credit services with DLT will remain subject to the compliance requirements of the licensing regime.
Also, entities that rely on technology alongside the provision of regulated services should have the needed organizational competence, enough technological resources, and risk management plans.
While there are legislative amendments to accommodate crypto use, the legislation or amendments have mainly focused on transactional relationships and activities with cryptocurrencies instead of the cryptos themselves.
Although there’s yet to be any legislation established to deal with crypto as a specific law, existing Australian law regimes still govern crypto.
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