Some countries have already managed to partially or fully recognize bitcoins. Australia is one of them.
The government intends to become a leader in digital innovation. When developing bills, local authorities rely on the experience of other regulators and the features of the blockchain. Cryptocurrency in Australia has not yet been equated with money, but it is being supervised.
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Regulatory Framework for the Crypto-Currency Industry in Australia
Crypto- and crypto-related services are a rapidly growing market all over the world. At the same time, globally there is no single crypto-regulation; countries are only developing standards and principles used in this area.
For this reason, when entering a new market, it is always necessary to study the specifics of crypto-regulation in a particular jurisdiction, as it may contain requirements, nuances, and conditions that must be observed.
To date, Australia has no specific regulatory basis based on crypto-currencies. In this regard, the applicable rules of Australian law depend on the functionality of specific crypto-assets.
Financial services companies are required to hold an Australian financial services license if their services and any product are related to this sphere.
Australian Investments Commission (ASIC) in its information letter of INFO 225 stated a cryptocurrency with functions similar to any existing financial product or securities will give rise to corresponding obligations established by law.
For this reason, it’s essential to first realize the nature of the crypto-currency being used and its similarities to existing financial instruments regulated by Australian law.
There is no denying the fact that every year, despite drawdowns in the crypto-market, digital funds are becoming more and more popular worldwide and Australia.
More and more entrepreneurs are starting to interact with the dangerous token market. The main task of all states is to create suitable and safe conditions for working with crypto-assets for their citizens, but not in this country.
Cryptocurrency currently has official legal status in Australia and is considered ordinary property. The laws regarding cryptocurrencies also seem to be very advanced.
These regulations require cryptocurrency exchanges to register through the Australian Transaction Reporting and Analysis Center and verify their clients, maintain records, and comply with government reporting requirements. Crypto-regulation makes a good contribution to the following aspects:
- Help provide greater clarity for token investors;
- Help companies develop their own blockchain-based innovations;
- Provide recommendations on exchanges of digital currency for all people;
- Assist regulators in establishing an appropriate regulatory regime.
The financial regulator is also stepping up efforts to prevent fraud, including the use of crypto assets.
The plan will establish a set of commitments and operating standards for service providers of crypto-assets to ensure they properly store clients’ funds.
Digital Currency Exchange (DCE) requires registration with the Australian Center (AUSTRAC). Failure to be officially registered can result in a heavy fine or imprisonment of up to two years.
Exchanges need to implement appropriate KYC procedures, properly verify customer identities, and report suspicious operations.
In addition, exchanges must form detailed records of KYC procedures and transactions for up to seven years. It’s essential to remember any financial firm in Australia must meet anti-illegal money circulation laws, which means that the company must take necessary measures to combat any such actions.
Advantages of Acquiring a Crypto License in Australia
Tax Considerations and Incentives
Companies carrying out operations with any crypto-asset and acting in this industry are covered by standard tax rates:
- corporate tax: The standard rate is 30%, for small/medium businesses it’s 25%.
Digital assets act as shares. Losses are subtracted from income. If a person manages to earn, he is obliged to pay tax. Such an activity can be considered as a business, but then many factors have to be taken into account: the availability of document flow, the regularity of operations, profit-making, and so on.
ASIC is responsible for regulating companies dealing with ICOs. Since 2017, virtual currencies have been recognized as legal tender in the country. To obtain crypto-exchange permission, you’ve to be authorized in AUSTRAC. The Australian Cryptocurrency Regulation Consultation will help you better understand what requirements you need to meet to obtain a crypto license.
Operational Advantages of a Crypto-License in Australia
The cryptocurrency market in Australia offers a wide range of opportunities for investors. After all, the regulation of the industry in the country is based on the principles of non-intervention. This attracts foreign entrepreneurs who plan to open a crypto company in the state.
- Possibility to ensure the sustainability of your business in the long term.
In general, opening an office in a new country will not only attract the attention of new customers and increase profits, but also ensure the sustainability of the business in the long term. Today the world is constantly changing, sometimes very dramatically. As practice has shown, the rules can change at the most inopportune moment, even in respected jurisdictions, so you cannot rely on just one economy.
- Ease of entry into a huge market and a wide range of business structures.
It is not difficult to enter the Australian market. And this is another reason why so many investors choose it. Everyone can choose one of several business structures and start trading right away. There are private and public companies, partnerships, trusts, etc. to choose from..
- Opportunity to take advantage of Australia’s global connections.
Australia’s open economy has allowed it to become a truly global player and a hub for companies that want to establish trade relations with different countries. Australia has managed to conclude trade agreements with countries in different parts of the world, especially with the Asian region. Therefore, today this state is one of the best places to enter the markets of Asia.
Australia has become the second country in the world to introduce regulation of virtual currencies. Australia is actively adopting cryptocurrencies, being a role model for other countries that are not yet involved. To see if Australians are true crypto enthusiasts, we have to look at the relevant statistics.
The author of this article is Denys Chernyshov – CEO and founder of the world-famous law firm Eternity Law International.