With a regulatory environment on par with Singapore, the US, and UK, Australia may soon develop a cryptocurrency and “digital assets” sector.
There has been a recommendation from a Senate select committee to establish a “market licensing regime” for digital currency exchanges and new rules for how exchanges handle digital assets.
It also pressed for changes to the way cryptocurrency trades are treated from a taxation perspective – a question many traders and holders of digital coins face – such that “digital asset transactions only create a capital gains tax event when they genuinely result in a clearly definable capital gain or loss”.
Despite collectively managing billions of dollars’ worth of trades every year, digital currency exchanges operate under a “light touch” regulatory framework, as noted in the committee’s report.
“The committee is of the view that a more thorough regulatory framework will assist the industry to mature,” it said.
“Indeed, many in the industry are calling for increased regulation so as to ensure that consumers can have increased confidence in their businesses and shoddy operators are weeded out.
“A licensing regime will demonstrate that comprehensive consumer protections are in place, and can also help to address bank concerns about risks posed by individual digital asset providers.”
That could reduce the number of cryptocurrency businesses and traders that are either “debanked” or refused service by banks because they are deemed to be too risky.
Consumers will also benefit from a comprehensive market licensing regime.
The committee also suggested creating a new decentralised autonomous organisation (DAO) company structure that “emerging types of blockchain-based organisations” could use “with clarity as to how they can operate in Australia.”
Under the DAO structure, a review of the current Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regulations is recommended.
The committee also made the recommendation the government change relevant legislation “so that businesses undertaking digital asset ‘mining’ and related activities in Australia receive a company tax discount of 10 percent if they source their own renewable energy for these activities.”
The final report follows the release of its third issues paper on the topic, which said Australia “is well placed for growth” however noted numerous areas of improvement to realise the country’s potential.
“Australia can be a leader in digital assets,” Liberal senator and chair of the committee Andrew Bragg said.
“This means Australians can access new choices and lower prices. It means Australians can have more control of their financial destiny rather than being dependent on endless intermediation.
“The committee has recommended a comprehensive crypto framework to deliver Australian leadership. We’ll be competitive with Singapore, the UK and the US.
“This will drive investment and jobs into Australia.”