The quick answer to this question is yes, bitcoin is legal in Australia. And so are other cryptocurrencies, cryptocurrency exchanges, and the wider blockchain ecosystem.
Let’s dig deep into this subject and start by knowing what bitcoin and cryptocurrencies are and how they are treated in the land down under.
What are Cryptocurrencies?
A cryptocurrency is a digital asset, and that’s why it’s also called a digital currency. It’s secured by cryptography and mainly runs on decentralized networks based on blockchain technology, a distributed ledger.
Cryptocurrencies are popular not only because they’re safe and secure but also because they’re not issued by any central bank or central authority. This quality makes them free from government or central bank intrusion or control, at least in theory.
Some of the most popular cryptocurrencies around the world include bitcoin, Ethereum, Litecoin, Dash, and XRP.
What is Bitcoin?
Bitcoin is the granddaddy of cryptocurrencies; not only is it the first-ever digital asset to exist, but it’s also the most popular and valuable one to date. It was created in 2009 by Satoshi Nakamoto, an elusive person who hasn’t been identified until today.
Bitcoin’s value is popular for its wild swings and quick ups and downs, making it a top asset choice for traders and speculators. And because of that, its notoriety as a digital currency has exploded in recent years.
At the same time, governments from across the globe have taken action to influence, if not directly control, the use of bitcoin and other cryptocurrencies.
The Australian Cryptocurrency Laws
The Australian government doesn’t recognize bitcoin as a form of money or a foreign currency. Instead, it’s considered an asset that’s subject to capital gains taxes.
Moreover, in 2018, the Australian Transaction Reports and Analysis Centre (AUSTRAC) implemented more robust cryptocurrency exchange regulations. Under these regulations, cryptocurrency exchanges are required to register with AUSTRAC.
In a nutshell, exchanges must identify and verify their users, maintain records, and comply with government reporting obligations. If a cryptocurrency exchange is unregistered, the entity is subject to criminal charges and financial penalties.
In May 2019, the Australian Securities and Investments Commission (ASIC) updated its regulatory requirements for cryptocurrency trading and initial coin offerings (ICOs), where new cryptocurrencies are offered to the public for the first time.
Further, in August 2020, regulators required many exchanges to delist privacy digital coins, which are a specific type of anonymous cryptocurrencies.
In the future, the Australian government will likely continue its pattern of proactive cryptocurrency regulation. Still, many people and authorities expect deeper scrutiny on digital assets from the country and the world going forward.
The Australian Bitcoin Market
Although the Australian bitcoin and cryptocurrency markets aren’t the biggest in the world, you can do a lot with them. Investing and trading in bitcoin isn’t new, and more people have been using digital currencies to pay for goods and services.
In the financial markets, cryptocurrencies are considered one of the safest assets. Hackers can’t exploit any bank account or credit cards, because your crypto assets are stored in a so-called digital wallet, which is protected by your private keys. Unless you give someone else access to those keys, nobody but you can ever spend or use your digital currencies.
On the flip side, concerns have been raised. Being a decentralized currency, bitcoin protects your privacy like no other assets; you can transact anonymously on the bitcoin network. Because of this, illegal organizations and shady entities have used bitcoin and cryptocurrencies for illicit activities.
In 2019, over AUD 515 million in bitcoin was spent on illegal activities, including money laundering. This is only 1% of bitcoin transactions, but it can grow bigger if left unchecked.
Moreover, since cryptocurrencies are free from any government control, people can easily move assets from one country to another, evading authorities and legal repercussions for illegal activities. As a result, some countries have not been as welcoming to bitcoin and cryptocurrencies.
Countries that Ban Bitcoin and Why
Bitcoin is decentralized and volatile, and some governments see it as a threat to the current monetary system. And since it has links to illegal activities, it’s not surprising that a handful of countries are saying no to bitcoin and cryptocurrencies. Here are some of them:
China is the world’s strictest government in terms of cryptocurrency regulation. The People’s Bank of China (PBOC) treats virtual currencies as illegal because they’re not issued by any recognized monetary institution. Yet, it’s a mixed bag; while laws are strict, large bitcoin mining farms exist in China.
At the same time, the Chinese government is partial to blockchain technology, or the tech that underpins bitcoin and cryptocurrency. Chinese President Xi Jinping encourages the country to prioritize blockchain development as they push for a “blockchain, not bitcoin” campaign.
Previously, the Russian government imposed a near-total ban on cryptocurrencies. Similar to China, Russia treats bitcoin cautiously while it portrays blockchain technology in a more positive light.
Recently, Russia signed a new law that allows cryptocurrency use. Specifically, Russians are allowed to mine and own digital assets. They can also trade virtual currencies for other virtual currencies. However, it’s still illegal to use cryptocurrencies to buy goods and services. If you’re trying to operate a blockchain company, it’s always best to hire legal services for crypto companies to ensure you are in the clear legally.
While the State Bank of Vietnam (SBV) is working on a legal framework to manage cryptocurrencies in the country, Vietnam has yet to embrace digital assets completely. At present, it’s illegal to issue, supply, or use bitcoin and other types of digital currencies as forms of payment.
While actual laws have yet to be implemented, India is known for its reluctance to accept cryptocurrencies. Recently, reports suggested that the Indian government plans to ban cryptocurrencies, imposing fines on anyone trading or holding such digital assets.
If the law comes to fruition, India will be the first major economy to make cryptocurrency possession illegal. It will also come as a huge blow to the millions of crypto investors in the country. Although no official data is available, Indian investors have invested around 100 billion rupees in crypto-assets, accordion to industry estimates.
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About The Author: Michael is an aspiring lawyer who likes to spend his free time researching different topics of law, especially about what is legal and what is not. He enjoys reading articles, watching documentaries, and attending lectures to become more informed about the law. He hopes that one day he will be able to use this knowledge to help people in need. Michael also has a passion for writing which led him to pursue journalism as his minor in college.
Through his studies, he has learned how to write professionally with clarity and precision. He is currently writing a novel about the life of a young lawyer who fights for justice in a world that is filled with corruption. Michael hopes to use his skills in writing and researching to pursue a career as an attorney one day. In addition, he also volunteers at legal aid clinics to gain more experience. From this volunteering experience, he has been able to help people better understand their rights and the legal system.
Michael is a dedicated individual with a passion for law and writing, and these qualities make him an excellent candidate for any legal field. He is eager to use his skillset to prove himself as a lawyer in order to contribute in making the world a better place.