The Australian government will recognize Bitcoin as a currency on July 1 and protect Bitcoin businesses and exchanges

Australia will recognize Bitcoin as a currency and abolish the Goods and Services Tax (GST) on Bitcoin on July 1, 2017. Bitcoin traders and investors will no longer be taxed when buying and selling Bitcoin through regulated exchanges and trading platforms.

Over the past two years, the Australian bitcoin exchange market has lagged significantly behind growing markets such as South Korea and Japan, which currently control more than half of the global bitcoin exchange market share.

Australian startups, exchanges and businesses dealing in Bitcoin and other digital currencies have been forced to flee the country by Australian banks' decision to stop providing banking services to Bitcoin businesses and the Australian government's double taxation of Bitcoin transactions.

However, from July 1, 2017, double taxation on Bitcoin, transaction tax and goods and services tax will be abolished. According to the 2017-2018 "Supporting Innovation and FinTech" budget, the Australian government wrote:

“The government will make it easier for new and innovative digital currency businesses to operate in Australia. From 1 July 2017, purchases of digital currency will no longer be subject to GST, allowing digital currency to be treated as money for GST purposes. Consumers who currently use digital currency may incur GST twice: once when they purchase the digital currency and again when they use the digital currency to purchase other goods and services.

The government will also protect Bitcoin businesses and exchanges

More importantly, the Australian government’s new vision to promote the development of financial technology and digital currency markets will most likely prevent local banks and financial institutions from unfairly denying banking services to Bitcoin businesses and exchanges .

If the above problems can be solved by July 1, the Australian Bitcoin market may usher in rapid growth, including user base and transaction volume. The Australian government document also shows:

Innovation will drive Australia's productivity. That's why the Government's $1.1 billion National Innovation and Science Agenda (NISA) is helping Australia take advantage of new economic opportunities. The Government is committed to establishing Australia as a leading global financial technology hub and is announcing a new plan to position the local FinTech industry as a world leader.

Speaking at the Blockchain New Zealand conference in Auckland, New Zealand earlier this week, bitcoin and security expert Andreas Antonopoulos highlighted the Australian government’s lack of intervention in the local bitcoin market and the impact such actions have on bitcoin businesses and exchanges.

Additionally, Antonopoulos criticized the local government’s taxation policy on Bitcoin, which essentially drives businesses and users away from Australia to other countries.

Antonopoulos said:

“Governments can choose to do nothing — which makes cryptocurrency trading worse — by introducing a sales tax on all cryptocurrency transactions like Australia has done, or choose to create a level playing field by controlling banks and incentivizing businesses, which makes it easier for cryptocurrency businesses to survive.”

With Australia’s new policy, the country’s Bitcoin ecosystem may see a sea change. Banks will begin to provide services to Bitcoin exchanges, and traders will no longer be charged GST on Bitcoin purchases.