Australia poised to take big step in regulating cryptocurrencies

Australia has joined the list of countries planning to regulate the cryptocurrency industry, with the government announcing plans for a major overhaul of the payment system that will also target digital currencies. According to Australian news reports, the planned regulations will focus primarily on crypto taxation, investor protection, and the regulation of digital banks and exchanges.

Jane Hume, the country's Minister of Financial Services, said the government aims to ensure that all cryptocurrency participants act within a regulatory ecosystem as adoption of various assets increases. Jane Hume further pointed out that the government can't guarantee your cryptocurrency, just as it can't guarantee a painting or a company's shares, and it shouldn't do so. But we can ensure that Australian exchanges, custodians and brokers work within a better and safer regulatory framework.

Under the planned regulations, the government will publish three key documents aimed at reforming the payments industry. One of the documents aims to collect opinions from major players on digital asset authorizations.

Notably, one of the Treasury’s recommendations is to force crypto exchanges to hold Australian investors’ assets within the country. In addition, the document will also reveal the results of two investigations into the crypto industry, which will include the terms of reference. The investigation is being led by Australia’s competition and finance ministry.

On the taxation front, the Board of Taxation (BoT) will provide the government with a comprehensive report on the appropriate policy framework for cryptocurrencies. Interestingly, the government expects the BoT to minimize the tax burden while providing advice to the crypto industry.

It is worth mentioning that as early as March 17, the Australian Taxation Office (ATO) pointed out that it would strengthen the review of cryptocurrencies to ensure that users accurately report their earnings and determine whether it is used for investment or business purposes. According to government sources, the ATO will also keep records for users to ensure that the expenses reported for the use of cryptocurrencies, such as software, commissions or brokerage fees, are accurate. The ATO estimates that more than 600,000 taxpayers have invested in cryptocurrencies in recent years, and trading volume has increased significantly.

Additionally, the report calls on the Australian government to conduct a policy assessment on the feasibility of CBDC in Australia.

Meanwhile, Australian Senator Andrew Bragg, leader of the Liberal Party, which is driving the country’s digital transformation, also called on the government to consider hiring experts to develop encryption regulatory policy within a dedicated department.

Previously, a YouGov survey showed that three-quarters of Australian businesses would accept cryptocurrency payments if the government regulated it. The study was commissioned by Australian cryptocurrency exchange Swyftx and comes as the Australian government prepares to formulate rules to regulate digital assets. Commenting on the government's assessment of the costs and benefits of digital asset regulation, a spokesperson for Swyftx said: "Our initial position is that Australia both needs and will benefit from a strong cryptocurrency regulatory regime. But it is extremely important that it should encourage innovation, not stifle it." Andrew Bragg also pointed out that the government has recognized the industry's strong consensus on the planned tough regulatory measures for cryptocurrencies. Since its establishment last year, the Senate Special Committee on Financial Technology and Regulatory Technology has submitted several recommendations on the proposed regulations.