In this piece, we break down Australia's overall attitude to cryptocurrencies.
Cryptocurrencies and blockchain are rising in popularity across continents and things are no different down under. Many Australian investors are seeking to buy Bitcoin and other cryptos, such as DeFi tokens, and the ecosystem as a whole is attracting some of the largest investment firms from around the world.
Australia’s government has issued few statements on cryptocurrency ownership or investing. Financial Services Minister Jane Hume recently commented: “They are volatile and high-risk assets and investors must be aware of these risks.” However, she also stated that the Australian government has no firm opposition to citizens investing in crypto.
The Australian Taxation Office and the Australian Securities and Investments Commission are charged with oversight of crypto regulation and tax matters. The ASIC website outlines guidance for citizens and businesses regarding ICOs, mining, trading platforms and payment services. The government remains wary of crypto due to its price volatility but has offered its help to citizens and businesses if they wish to deal in digital currency.
Even though trading and holding digital currency is completely legal, the taxation office has issued a stark warning to citizens that they must disclose any capital gains from cryptocurrency trading. Taking all this into account, broadly speaking Australia offers a relatively friendly environment for crypto investors and new companies in the industry.
This beginners’ guide will cover the legality and crypto climate in Australia, and will also provide advice as to where Australians can safely buy digital assets.
Is Cryptocurrency Legal in Australia?
Yes, cryptocurrency is legal in Australia. The country has put up few barriers to investing in crypto assets. Australia’s central bank, the Reserve Bank of Australia, has been exploring the creation of a central bank digital currency (CBDC). This is great news for blockchain innovation in the country, although it’s worth keeping in mind the sharp distinction between decentralized and central bank-issued digital currencies.
The Prime Minister of Australia, Scott Morrison, has said he believes that “blockchain is going to transform the Australian banking system.” He added: “the thing I like about it most is that it is going to deliver much tougher competition for the big banks.”
Even though the government is relatively accepting of blockchain and digital currencies, they have still imposed a few rules it’s worth being aware of.
Key Regulations
In Australia, cryptocurrencies are viewed as digital assets and are monitored by the Australian Securities and Investments Commission (ASIC). The regulations are in place to enforce best practices for ICOs and crypto exchanges, as well as crypto service providers. As with most governments, the government is especially vigilant when it comes to the potential for money laundering and other illicit activities.
Key guidelines include the classification of various types of crypto tokens, what constitutes a crypto exchange or trading platform, and what counts as a payment services provider. The rules require crypto businesses to be transparent in filing their reports and taxes and to remain on the alert for possible money laundering or terrorism financing.
Crypto’s status in Australia can be summarized with a few key points:
- Cryptocurrency is legal in Australia and is defined as a digital asset
- The government has explored the potential of blockchain technology, including researching the issuance of a CBDC
- ASIC monitors crypto trading activities and crypto businesses
- Australia enforces strict anti-money laundering measures
Are Crypto Assets Taxed in Australia?
Yes, cryptocurrency is taxed in Australia by the Australian Tax Office (ATO). ATO keeps track of crypto investors by collecting information from crypto brokerages and exchanges. All crypto investors will need to pay capital gains tax to avoid penalties from the ATO. If you have received crypto as payment for services, you are liable to pay income tax on those earnings, just as you would if you were paid in AUD.
You will need to pay taxes after making the following transactions:
- Selling crypto for AUD
- Trading one cryptocurrency for another, e.g. buying ETH with BTC
- Purchasing goods or services worth in excess of A$10,000
- Gifting cryptocurrency
Come tax season, Australians simply report their capital gains or losses as they would for securities.
Taxes on Mining
In Australia, there are two classifications for mining: hobbyist or business. If you are mining coins as a hobbyist, you only need to report your income from mining when you sell your tokens. The ATO provides information on how you should define yourself and when you might need to consider your mining operation a business.
In short, unless you are running a large-scale crypto mining operation, you will only need to pay capital gains tax when you sell the coins you’ve earned. However, if you are mining as a business, your tokens will be assessed as taxable income as soon as they are mined.
Who Accepts Cryptocurrency in Australia?
Crypto isn’t yet widely accepted in Australia as there are a number of regulations and hurdles to it becoming legal tender. However, there are numerous places that will gladly accept crypto in Sydney and other locations. Below is a list with a selection of businesses that accept Bitcoin and other digital currencies in exchange for goods and services.
Sydney
- The Old Fitzroy Hotel. This hip pub, brasserie and theatre in Woolloomooloo will gladly accept Bitcoin for beer and everything else.
- Spawn Point Bar. A video game and arcade bar on Clarence Street.
- Black Star Pastry & Cafe. This famous cafe will accept crypto payments for pastries and the “world’s most Instagrammed cake.”
Melbourne
- Altius Coffee Brewers. An inviting and fun coffee shop on Flinders Lane, Melbourne.
- Eclectico. A trendy fashion boutique that sells clothing, accessories and vinyls.
Perth
- Aiyana Retreat. This retreat offers luxurious accommodation for holidaymakers in Perth.
- Frisk Small Bar. Perth’s premier gin bar.
Where Can You Buy Crypto in Australia?
Investors can purchase crypto assets by setting up an account with a trusted exchange. Most popular United States-based and international exchanges are available to Australians and there are excellent Australian exchanges as well, such as CoinSpot. Many of these options will directly support AUD deposits.
Australia offers investors the opportunity to invest in veteran cryptos like Bitcoin and Ether, as well as thousands of altcoins. Australians have the freedom to purchase, stake or mine any digital currency as they please, provided they follow the law as regards taxation and anti-money laundering rules.
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