New Senate Laws to Set Australia as the Future of Digital Innovation - October 2021
A Senate inquiry has recommended overhauls to taxation laws and to introduce new licensing and regulatory regimes for crypto and digital assets, that are largely unregulated. The proposed regulatory framework would adopt a ‘risk-based approach to identify digital asset services that pose sufficient risk to warrant regulation’, allowing for a more secure investing environment and to encourage digital and crypto-asset businesses to set up in Australia.
The Select Committee on Australia as a Technology and Financial Centre made 12 recommendations with new regimes for market licensing for digital currency exchanges (DCE), changes to anti-money laundering, custodial and depository services. Currently, the only regulatory measures to operate a DCE is to register with the anti-money laundering regulator AUSTRAC which fails to oversee investor protections. The committee has also recommended that capital gains tax be applied ‘when there is a clearly definable capital gain or loss’ on digital currency trades but has not mention what the threshold should be. Furthermore, a 10% tax discount was recommended to be applicable for businesses that sourced their own renewable energy in their cryptocurrency mining operations.
The committee chair, Liberal senator Andrew Bragg, said he believed the recommendations struck the right balance between encouraging innovation and protecting consumers. Research has shown that 17% of Australians currently own cryptocurrency where these new changes will protect consumers, promote investment in Australia and allow us to remain competitive globally.