Australia has established a pattern of proactive cryptocurrency regulation, which deserves attention from the rest of the world. Cryptocurrencies and exchanges are legal in Australia, and the country has been progressive in its implementation of cryptocurrency regulations. For instance, digital tokens are treated as property and subject to Capital Gains Tax (CGT). Exchanges operating in Australia are required to register, identify and verify users, maintain records, and comply with government standards. And, finally since 2019, regulatory requirements for both initial coin offerings (ICOs) and cryptocurrency trading have been implemented in the country.
Such rules and regulations demonstrate Australia’s ongoing efforts to offer a clear framework for crypto firms to function in the years to come. The proposed framework reflects their goal to place Australia at the forefront of the international drive to rein in digital companies and would allow consumers to safely buy and sell crypto assets in a regulated environment. It promotes innovation, by cultivating trust in the industry.
These regulatory efforts have also translated into other blockchain-based assets, the underlying technology behind cryptocurrencies. Blockchain, as its name suggests, is simply a network of interconnected blocks or an electronic ledger. A group of transactions are contained in each block, and each member of the network has independently validated each transaction. In sum, a secure and decentralized record.
The Australian government started seeing the potential for blockchain beyond financial transactions. First and foremost, its economic potential. Combining blockchain technology with other technologies can add economic value to a range of business sectors. Australia can contribute to an estimated global annual business value of over US$175 billion by 2025 generated by blockchain. But also in government operations – safeguarding data, preventing fraud, waste, and abuse in government services while also increasing trust and accountability.
For that reason, the Australian government created the National Blockchain Roadmap. The roadmap sets out a strategy for governments, industry, and researchers to capitalize on opportunities and address different technological and economic challenges. They see regtech as a crucial component of this strategy. According to government officials: “A regulatory environment that is conducive to innovation and growth is essential for Australia to take advantage of the blockchain opportunities available—including international investment opportunities. This can be achieved by ensuring our regulatory systems are principles-based and technology-neutral”. Their regulations are focused in consumer and investor protection, in shielding them from fraudulent schemes. This is why the main topics are requirements for user identification, protection of privacy, Security, data provenance, integrity and governance, and smart contract standards.
These regulations are quite reasonable and intelligent in nature, because they do not change the essential elements of De-Fi. Governments around the globe should look at these pro-active regulations for inspiration. Blockchain and cryptocurrencies are changing the world and governments should be preparing for this new economic scene.
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