During the last few years, Australia’s interest in cryptocurrencies has been increasing with ever more individual investors and portfolio managers looking to buy and sell Bitcoin. Despite the fact that Bitcoin and other cryptocurrencies have been readily embraced by the Australian public, the country’s banks and central government have been slower to accept the new currency.
Right now, most major Australian banks refuse outright to engage in business with cryptocurrency companies. This resistance to new currencies is a historically normal response as banks protect themselves from high risk exchanges. However, there are some signs that banks are becoming slightly more liberal in their approach. For example, although they won’t trade the cryptocurrencies themselves, most now allow their customers to buy them using their debit cards, if not their credit cards.
In recent years, the Australian government has taken a relatively progressive approach to the legislation surrounding cryptocurrencies. For some time, cryptocurrencies including Bitcoin had been doubly taxed under the goods and services tax. However, in 2017, cryptocurrencies were declared legal and it was announced that they should be treated as property, thus making them subject to Capital Gains Tax.
Last year, more changes took place. This time the regulations controlling cryptocurrency exchanges were overhauled. Much tighter rules issued by the Australian Transaction Reports and Analysis Centre (a government department) mean that exchanges must be registered with the government, their users must be properly verified, proper records must be maintained, and various reporting obligations met. Those cryptocurrency exchanges that fail to meet these legal requirements are now subject to legal action, including criminal charges and fines. The cryptocurrency community has reacted positively to the new legislation because the previous confusion and controversy that prevailed before it was implemented was thought to be damaging. It’s believed in some quarters that clearer rules will help to motivate growth of Bitcoin and other cryptocurrencies.
Investors are currently watching Bitcoin’s price rise. In April it reached its highest point since November, breaking the $5,000 barrier across many exchanges. Some have put the surge down to a single, huge Bitcoin order, which in turn may have triggered an automatic scramble for the currency. Others, meanwhile, see the price hike as a positive sign for future trading.
The reaction of Australia’s banks and government to the advent of cryptocurrencies couldn’t be described as pioneering. However, neither has Australia been entirely reluctant in its adoption of the new regulations. Some countries have been very eager to mark themselves out as leaders in the trading of cryptocurrencies. Malta is sometimes known as a ‘blockchain island’, Singapore’s regulation is amongst the most progressive, and Switzerland has great crypto credentials (although these have been damaged more recently). Australia meanwhile, represents the middle-ground. Not out front, or behind, this is a country where cryptocurrencies’ potential as game changers is still to be discovered. Once the currencies have grown in legitimacy and their reputation of disruptive force has dissipated, they’ll find their place in the Australian economy.