Australia has been open in accepting cryptocurrencies as legal and made some pragmatic implementations in their regulations.
In 2017, with the legalization of cryptocurrency, it had recognized such items as property and is subject to their Capital Gains Tax (CGT). This has made Australia one of the industry leaders, with the fintech community gaining a favorable position in commerce. Here are some of the regulations for the use of cryptocurrency in Australia.
In 2018, digital currency exchange providers were placed under new regulations from AUSTRAC, the country’s intelligence and anti-money laundering and counter-terrorism financing (AML/CTF), which seeks to prevent the use of these systems for money laundering or to finance crime and terrorism. All DCEs operating within the country must register with AUSTRAC. A registration helps gain the consumer’s confidence and protect the country from adverse manipulation to benefit crime. Registered entities are required to implement a process to identify and verify their customers. They will also have to monitor and report suspicious activities taking place on their platform.
Issuers of Crypto-Assets
Cryptocurrencies issued that constitute a financial product and the entities that offer them must hold an Australian Financial Services (ASF License ) and are treated with similar financial obligations. Entities that issue cryptocurrencies are also under the Corporations Act as it involves the exchange, management, and sale of these financial products.
For initial coin offerings or ICOs, the entities must determine all the rights and features when classifying their crypto-asset as a financial product or if it involves one. Usually, ICOs seek to raise capital to fund a particular project by issuing crypto-assets such as tokens. Suppose they issued a financial product (like an interest in a managed investment scheme or security). In that case, the Corporations Act’s provisions, AFS licensing, and other requirements must then be considered. This is to ensure the integrity of the financial market as well as the consumer’s welfare.
Payment and Merchant Service Provider
Because payment structures for global transactions are woefully inadequate, cryptocurrency has made it easy for money to be sent anywhere worldwide. You can transfer money in real-time between users with any currency. It can be surprisingly easy to learn how to buy ripple Australia and deposit them to your trading account. Additionally, service providers can exchange your current cryptocurrency to other currencies depending on how they stack against traditional money or BTC.
A financial product or token sold to a retail customer must have a regulated disclosure document that complies with the requirement of the Corporations Act and the regulatory guidelines published by ASIC. The attachments must document pertinent information such as fee structure to help the client decide whether to purchase the cryptocurrency from the issuer. Exemptions in Corporations Act involve investing in the financial products to “sophisticated investors” or a wholesale client. This has a different minimum investment amount and may not include a regulated disclosure.
The Australian Consumer Law prohibits misleading or deceptive conduct in commerce and the context of advertising. Issuers of cryptocurrency must be careful about how they promote or portray their products not to mislead their customers with faulty materials. Misleading practices may include going on social media or any other platform to create an appearance of vast public interest, not disclosing appropriate information about the token, or implying that a token is a regulated product when it’s not.
In the last decade, bitcoin and other cryptocurrencies have emerged as speculative investments. Their advantage is a decentralized system meaning that they can be used anywhere in the world with little to no fees. However, they also pose a great risk to consumers and investors. That is why the Australian government has regulated them under the same laws as any other financial service or product subject to a number of obligations.