Australia is About to Get a Big Cryptocurrency Overhaul

Is Bitcoin Australia's crypto-nite?

Once upon a time, cryptocurrency was used for untraceable, underground transactions.

These days, Australia is one of the biggest early adopters of crypto, with a quarter of Australians holding the currency according to a 2021 survey.

The federal government has announced it’ll make a move toward regulating cryptocurrency, and it's set to be the biggest overhaul to payment systems since the early internet days. They say it'll be their way of making the payment system more credible.

Crypto is still fairly foreign to a lot of us, but this is pretty big. So let’s break down what this all means:

What does the overhaul involve?

The government is now consulting with the sector and seeking feedback.

The overhaul proposes to look at the following:

• A tax system for cryptocurrency.
• Protections for investors.
• Regulating digital banks and exchanges.

In the same vein, Treasurer Josh Frydenberg last year announced he’ll legislate a broader definition of payment systems by regulating other things like Apple Pay and AfterPay.

Where does Australia stand with crypto now?

This comes in response to a parliamentary report into the sector filed by Senator Andrew Bragg that found Australia’s current regulations were not fit for purpose.

ATO data suggests more than 800,000 Australians have made transactions with digital assets since 2018.

According to a 2022 report on Blockchain & Cryptocurrency Regulation, the government has taken a largely non-intervention approach to crypto regulation in the past.

And as it stands, Australian law doesn’t equate digital currency with Australian currency (AKA: fiat money in the crypto word) and doesn’t treat cryptocurrency as “money”. 

Despite this, digital currencies have been caught by Australia’s anti-money laundering and counter-terrorism financing regime since 2018.

Is this a good thing?

Financial Services Minister Jane Hume said in an address this week that the move is in response to predictions the crypto and blockchain sectors could be worth $68.4 billion by the end of the decade.

According to TIME, experts say regulation is actually "a good thing" for investors, as it encourages more stability in the market, increases investor protection and confidence, and brings a safer crypto ecosystem.

Senator Andrew Bragg said at a conference last year the proposed changes would “protect consumers against malicious operators.”

Just heard @SenatorHume talk about regulation & licensing on service provides to help protect crypto investors in Australia. Sounds good to me. Confidence and protection in the market are welcomed. Allow innovation in blockchain, protect investors!#cryptocurrency #blockchain

— Pete | Cardano ₳mbassador, SPO, YTer 🍍🍕👌 (@astroboysoup) March 21, 2022

On the flip side, many crypto enthusiasts could oppose any new regulation, as it could "hinder innovation, and goes against the spirit of cryptocurrency," according to TIME.

When will this all come into play?

While the government seeks feedback after releasing three key documents on Monday, the reforms should be finalised and implemented by the end of the year.

By year's end, a large part of the law reform will be completed if we are returned at the election. The dividend will be strong consumer protection, more investment, jobs and more choice and agency. The nation will also be prepared to take advantage of the crypto disruption.

— Senator Andrew Bragg (@ajamesbragg) March 21, 2022

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