Cryptocurrency gained legal status in Australia in 2014 (the same time it happened in the USA). The ATO already provided some bylaws for crypto and GST in 2014.
As for now regulation is based chiefly on standard principles of financial services in the country and some bylaws from regulators, such as:
-Australian Securities and Exchange Commission (ASIC)
-ATO (taxation office)
-AUSTRAC (financial intelligence unit)
Australian Treasury (AT) has issued amendments (10) in 2022 regardingcrypto regulations in the country. It concludes that ASIC regulates cryptocurrency operations and crypto entities, which may be referred to as “financial products,” according to the “Corporations Act and the Australian Securities and Investment Commission Act 2001 (ASIC Act).”
Cryptos, not financial products, are considered consumer products and are “regulated by the Australian Competition and Consumer Commission (ACCC) under the Australian Consumer Law.”
Whether a crypto asset is considered a financial product depends on its use, as primarily defined in section 763A of the Corporations Act.
AT position in details
New regulation also were discussed in the Australian Parliament (11). According to it, “the term 'crypto-asset' is an umbrella term to describe products commonly referred to as ‘digital assets’, ‘virtual assets’ or ‘digital tokens’.” Parliament also quotes ASIC’s definition of crypto assets.
A crypto-asset is a digital representation of value or contractual rights that can be transferred, stored or traded electronically. Crypto-assets use cryptography, distributed ledger technology or other technology to provide features such as security and pseudo-anonymity. A crypto-asset may or may not have identifiable economic features that reflect fundamental or intrinsic value.
According to the Crypto Penetration assumption, crypto entities in Australia need to get an AFSL license from ASIC only in some cases - for custodians, significant crypto to fiat exchanges.
It’s unclear if it is essential for all wallets and custodians since ASIC implements a case-by-case approach. This position is based on the FTX Australia license case investigated in local media UNSW Sydney (12).
The Australian financial service (AFS) licensing regime since the late 1990s authorises each firm to do specified things, in relation to specified financial products, for specified clients. Each firm’s licence is different, and what is required by ASIC is different depending on what the firm is authorised to do.
In 2023 ASIC summarised its regulation approach to digital assets in the overview (13) and regulation proposals.
ASIC regulates crypto-assets and related products and services to the extent they fall within the existing regulatory perimeter of ‘financial products and services.’ Crypto-assets that are not financial products and services are generally not regulated by ASIC. They may, however, be subject to other Australian laws—for example, the anti-money laundering and counter-terrorism financing laws regulated by AUSTRAC, consumer protection obligations regulated by the ACCC, and the taxation requirements regulated by the Australian Taxation Office (ATO).
During 2023-2024 there were a lot of legal initiatives and discussions on crypto regulation in the country. The AT has provided a proposal to create CASP regulation framework in its consultation paper (14), the idea was to make the CASSP license essential for all crypto entities in the country. However, new regulations were delayed until 2024. Also, local senator Andrew Bragg prepared (15) its version of the crypto bill called The Digital Assets (Market Regulation) Bill 2023 (16). This bill included AT recommendations, but it is not implemented yet - in the end of 2024. Senator Andrew Bragg blames (17) the Labor Party of Australia, which didn't support this initiative. So, as for the end of 2024 the country doesn't have special crypto regulations, but crypto operations are already covered by existing financial regulations. In most cases, AFSC license (fintech) and AUSTRAC (FIU) registration are essential. Position of ASIC in 2024 is provided (18) in FM article. You may get more information about ASIC requirements for an AFSL license in this detailed FAQ (19).
