Why Australia Needs to Speed Up on Crypto Regulations

Crypto regulation is a delicate topic that has seen world governments and industry stakeholders engaging with each other for years trying to find some common ground. It has also been a source of frustration for those within the crypto industry as many world governments have allegedly not been up to the task.

Whether this is through the lack of crypto-related laws or anti-crypto legislation, getting crypto properly regulated seems like a never-ending battle. One country that has come under scrutiny in the past for its treatment of cryptocurrency and seems to be making some moves to correct this is Australia. A look at the past and current regulation of cryptocurrency in Australia reveals a country that is in dire need of catching up. 

How Crypto is Treated in Australia 

To its credit, Australia has not been overtly hostile to the crypto industry. Cryptocurrency is not illegal to be used, though the government does not recognize it as a legal tender. This is in stark contrast to countries like China that have outright banned cryptocurrency. But the situation is still far from perfect.

The issue that those within the crypto industry have with the Australian government is that it does not yet have laws that are specific to cryptocurrency. Instead, it tends to blanket-apply past laws to the industry without enough context and nuance. An example of this is its anti-money laundering and counter-terrorism financing (AML/CTF) laws. These laws were created to curb the use of securities and other financial instruments for money laundering and terrorism purposes. 

But since 2018, cryptos have been included under these laws. However, official documents from Australian regulators admit that the determination of whether or not crypto should fall under these laws depends on whether it is deemed a financial product. There are also certain activities related to promoting cryptocurrencies such as wash trading that are prosecuted under Australian consumer protection laws. But still, the boundaries of these laws and their applications are not clearly defined. 

Why This Treatment Needs to Change 

What the Australian government seems to have been doing for a while now is trying to fit square pegs into round holes. By simply placing cryptocurrencies within the laws that were created prior to their existence, the industry is underregulated or poorly regulated. There is confusion on the part of crypto users about how their assets are to be classified and corporations are not done any favours.

This also comes as many other countries have been taking more proactive steps to better regulate cryptocurrency as an entity in itself. As many of us know, cryptocurrency is very unique in that it is a currency, a store of value, and an investment vehicle rolled into one. Trying to regulate it the exact way you would a stock or a traditional currency will only cause more friction between regulators and industry stakeholders, as we already see in Australia. 

And as history has shown, crypto businesses will not always stick around waiting for better laws to be put in place. Years ago, there was a mass exodus of businesses from India after several harsh crypto regulations were put in place and the impact on the local industry was not insignificant. From the loss of jobs to the Indian crypto users who lost access to the businesses they used to patronize, years of progress were undone seemingly overnight. 

It is also worth noting that the rest of the world isn’t dragging its feet in crypto regulations the way Australia has. From the U.K. to the U.S., many world powers are seemingly in a race to become the next big crypto hub. One of the ways this is done, naturally, is by putting laws in place that are friendly towards the crypto industry as opposed to being hostile. These include grants, tax incentives, and even the creation of Central Bank Digital Currencies (CBDCs). 

Without properly defining the metrics of whether or not a cryptocurrency is a financial product, Australia has a long way to go before it can begin to compete with other countries for the future of the industry. And the brunt of this will, unfortunately, be felt by Australians themselves. 

Rather than having to deal with such outdated crypto regulation, the country could focus on the development of more use cases for crypto.  Crypto gambling, for example, is merging the best of both worlds by allowing Australians to enjoy their favourite betting games with cryptocurrency. More Australian businesses are also accepting cryptocurrency as a form of payment—from car dealers like Scuderia Graziani to property developers like Broadwater Builds—and there is still the investment side of digital assets. If these regulatory issues can be sorted out in time, the developments that can be made in the crypto sector in the country could be enormous. 

To its credit, Australia is starting to take positive steps in the right direction. Its treasury conducted a token-mapping exercise earlier this year which included consultations with stakeholders in the industry. The goal of this was to help in the proper classification of crypto assets. On top of this, a bill is being pushed through its parliament to increase the speed of crypto regulations. 

If these efforts yield success, and fast enough, Australia could be on track to competing with other nations for the crypto sector. If not, it risks falling behind on the world stage.