There are three key areas on which the federal government is consulting over a regulatory framework to help provide Australians buying cryptocurrency with some level of protection, as well as clarifying what digital assets like cryptocurrency should be taxed.
Government consultations are taking place on the development of a licensing and custody regime for digital assets, an examination by the Council of Financial Regulators on de-banking, and a Board of Taxation review of taxing digital assets.
Superannuation, financial services and the digital economy minister Jane Hume said more than 800,000 Australians have already invested in cryptocurrency, and that cryptocurrency and related blockchain technology will be here to stay.
She said the federal government will move to regulate the area appropriately to protect consumers to the extent required but that does not mean cryptocurrency will not come without risk.
“Government can’t guarantee your crypto any more than it can guarantee a painting or a share in a company, and nor should it,” Hume said.
“But we can make sure Australian exchanges, custodians and brokers — Australian players in the crypto ecosystem — work within a regulatory framework that is better, safer and more secure.”
Hume said the crypto ecosystem was a new frontier and the government will not stand in the way of people seeking to access the opportunities that exist in dealing with digital assets.
Treating cryptocurrencies as if they are the same as other investments for the purpose of regulation, according to Hume, would be counterproductive because there are inbuilt protections within the blockchain technology that do not exist in an environment where a human adviser is in charge of funds.
The government will instead look at establishing a licensing framework for exchanges, brokers and custodian services so that the services that customers use to buy cryptocurrency have some form of regulatory approval.
“We are serious about getting regulation right for the digital age — emerging technologies like crypto are key.”
Treasurer Josh Frydenberg said the tax consequences for cryptocurrency would be considered by the Board of Taxation as part of a review to examine the best tax setting for these new assets.
“Cryptocurrencies and assets are a global phenomenon, and as more Australians invest in these new asset classes and embrace the new technologies underpinning them, it is critical that we have a robust and competitive tax and regulatory regime in place,” Frydenberg said.
“Tax certainty for investors and those transacting will also be vital. That is why the government has initiated a Board of Tax review into the appropriate tax settings for these assets. Our position is clear: to provide greater certainty and confidence, not increase the overall tax burden.”
The Council of Financial Regulators will be looking at de-banking, which occurs when a bank or banks refuse to provide services to a customer, as it impacts companies in the financial services sector.
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