Understanding Cryptocurrency in Australia

Cryptocurrency in Australia is legal, so let's get to know how the country adopts cryptocurrency in daily life.

Cryptocurrencies soaring high at the beginning of 2021 has made Bitcoin, Ethereum, and altcoins like Shiba Inu have been desired by many people. This phenomenon also happens in Australia, where many investors are flocking to Bitcoin and other crypto investments like DeFi tokens. According to comparison site Finder, Australia tends to be more bullish on cryptocurrencies than most other countries around the world.

The Finder survey also found that Australia has the third-highest crypto holding rate in the world at 17.8%, surpassing countries such as Indonesia (16.7%) and Hong Kong (15.8%). On the report of a survey conducted in 2020 by statista.com, around 18.4% of citizens in Australia own cryptocurrencies. This figure has increased from the previous year's number at 16.8%.

Since its creation a decade ago, crypto assets are increasingly sought after and become a major global focus. As a result, the types of digital tokens circulating in Australia also expand, even though Bitcoin still occupies the main position of the most loved coin. Of the total number, around 74% of Australian investors own Bitcoin, while the second most popular coin is Ripple at around 28%, followed by Ethereum in third at 27%.

Cryptocurrency Regulation in Australia

So, the main question is: are cryptocurrencies legal in Australia? Yes, cryptocurrencies are legal in Australia. In fact, Australia's central bank, the Reserve Bank of Australia, is considering whether to issue a Central Bank Digital Currency (CBDC).

Although CBDC and cryptocurrency are two different types of digital currency, this news is certainly a sign that the Australian government is welcoming blockchain technology. Australian Prime Minister Scott Morrison even said that blockchain would change the Australian banking system.

If that is the case, Australians are free to buy and sell cryptocurrencies, right? Although governments have relatively welcomed blockchain and digital currencies with open arms, there are many rules and regulations that need to be complied with.

In Australia, cryptocurrencies are overseen by the Australian Securities and Investments Commission (ASIC). ASIC is in charge of managing crypto exchange transaction practices, organizing ICOs, overseeing mining, payment, and monitoring exchanges activities. For crypto-asset-related matters, the Australian government must strictly control them to prohibit money laundering and other illicit activities.

The regulation requires crypto businesses to be transparent in filing their reports and taxes and guard against possible money laundering or terrorism financing.

The Australian government has also issued several statements regarding crypto ownership or investment. Despite the widespread presence of crypto in Australia, the Minister for Financial Services Jane Hume described crypto as a volatile and high-risk asset, so people should be aware of the threats before jumping into the crypto space.

All in all, the government offers help to citizens if they want to deal with digital currencies, thus they can avoid cryptocurrency fraud or other problems.

How is Cryptocurrency Taxed in Australia?

If you're wondering whether Bitcoin or Ethereum is taxed in Australia, the short answer is yes. In general, Australia is friendly to crypto investors and new companies as trading and holding digital currencies is completely legal. However, the tax office also issues a stern warning to citizens to honestly report any capital gains from cryptocurrency trading.

Just like ASIC, the Australian Tax Office (ATO) is also tasked with overseeing crypto regulation, particularly in regard to its taxation. ATO is able to track crypto investors based on information from brokers and crypto exchanges since in Australia, all crypto investors are obligated to pay capital gains tax. For example, if your business or service uses crypto payments, you are responsible for paying income tax.

Then, on what transactions do Australian citizens have to pay taxes?

• Selling crypto for AUD.
• Trade one cryptocurrency for another, e.g. buy ETH with BTC.
• Purchased goods or services worth more than A$10,000.
• Gifting someone cryptocurrency.

Is Crypto Mining Legal in Australia?

Yes, it's legal in Australia as long as the miners use their own devices and electricity.

When they want to mine, they need special hardware to make sure they use it cost-effectively. If they don't have the mining equipment, they need to look for a computer hashing power rental through a cloud mining service.

There are two classifications for mining tax: as a hobby or a business. Mining as a hobby means the miner needs to report their earnings from when they sell the mined coins. Basically, considering they are not businessmen operating large-scale crypto mining, they only pay capital gains tax from when their coins are sold. It's different if they run mining pools because their coins then will be taxed immediately after being mined.

Where to Spend Cryptocurrency in Australia?

Unlike El Salvador, crypto is not legal tender in Australia, so not many places accept payments with crypto yet. However, there are plenty of places that would happily accept crypto, like in Sydney and other locations.

Prior to the pandemic, there were several tour companies in Queensland offering crypto tourism to the Southern Great Barrier Reef where accommodation could be paid for in cryptocurrencies. Here's a list of some retailers who accept cryptocurrencies in Australia:

The Best Way to Buy Cryptocurrency in Australia

In the past, Australians had difficulty finding places to buy and sell cryptocurrencies. But fortunately, with the boom of digital assets, the list of both Australian and international crypto exchanges is growing rapidly.

They are countless, so you might be confused about choosing the right platform. Well, actually, on the condition that the exchanges are legit and trusted, you can buy crypto assets anywhere.

The most popular exchanges in the world are mostly based in the United States, but Australia also has excellent apps like CoinSpot and eToro. Both companies support deposits using AUD.

If you are in Australia and want to buy crypto using AUD, we recommend registering with a local exchange as most of them will offer AUD deposit service. You can contact customer service via live chat to better understand the procedure for buying crypto.

However, if you're feeling burdened with filling lots of forms and prefer buying with cash, there's an even more practical way to buy crypto, especially Bitcoin, which is through Bitcoin ATM. Bitcoin ATMs are becoming increasingly popular in Australia as they are available in several major or minor cities around the continent. Crypto enthusiasts take advantage of Bitcoin ATMs primarily because of their convenience, security, fast process, and anonymity.

Similar to conventional ATMs, Bitcoin ATMs are claimed to be more efficient because they don't have the complications that often arise when registering for an online exchange.

Since the end of 2017, there have only been 21 Bitcoin ATMs in Australia across major cities such as Sydney and Melbourne. But currently, the number of Bitcoin ATMs has grown rapidly in the last 10 months with a total of 54 machines. As a result, now people in small towns also have access to Bitcoin ATMs.

EndNote

Australia welcomes cryptocurrency investment opportunities in the form of Bitcoin, Ether, and thousands of altcoins out there. Therefore, it's no wonder that its citizens have the freedom to buy, stake, and even mine as they please, as long as they comply with laws related to taxation and anti-money laundering regulations. Hence, it's important to know the capital gain tax requirements when buying and selling in order not to get warnings from ATO.

As explained above, buying cryptocurrencies in Australia is not difficult. Most essentially, if you choose to buy on exchanges, make sure the company is licensed to avoid fraud or other kinds of trouble in the future.