Is Bitcoin Legal In Australia?
Cryptocurrency has been at the centre of attention for a while and the popularity is showing no signs of slowing, especially with more businesses adopting digital currencies. As such, the financial markets are constantly transforming, which leaves legislators wondering if Bitcoin is legal.
If you are considering joining in on the craze for bitcoin, then I’m sure you have some questions regarding the legality of bitcoin and it’s uses in Australia. To help you understand more about bitcoin and the legal issues surrounding it, here is some useful information and online resources.
The Legality of Bitcoin
One of the first countries to join the cryptocurrency hype was Australia. Although it might not be the largest market for cryptocurrency, it is rapidly growing. As a result, the country has taken steps to reinforcing their anti-money laundering laws.
The Australian financial intelligence regulator, AUSTRAC, now has the power to regulate all of the cryptocurrency exchanges in Australia, which means that all cryptocurrencies will need to sign up on a certain currency register. Although in 2018, new laws have been introduced to regulate cryptocurrency, the legality still remains to be questionable in some ways or another. Bitcoin is a digital currency which means that it is not printed out. Due to this, Bitcoin could be counted as anonymous, so the legality of it depends on how the currency is used.
According to Wikipedia on the Legality of Bitcoin by Country, Bitcoin in Australia is marked as Legal since December 2013 by the governor of the Reserve Bank of Australia (RBA).
However, since the inception of bitcoin, there have been multiple times when the legality of this cryptocurrency was questioned. This is due to previous controversies and claims that involved illegal purchasing activities, such as purchasing illegal products online. And various online research publications to support such claims by suggesting "Close to half of all transactions in bitcoin are associated with buying and selling illegal goods and services" by Professor Talis Putnins of the University of Technology Sydney (UTS) in his How much illegal activity is financed through Bitcoin article in late 2017.
Is Bitcoin mining legal in Australia?
Another major part to Bitcoin is the mining aspect. Bitcoin mining is legal in most countries, including Australia, as long as you are using your own resources, such as electricity and processing power. The Australian Tax Office (ATO) has an example on running a Crypto Mining business and tax implications which might be useful if you're involved in that space as you may be able to write off your business expenses related to mining (including the electricity costs).
The Safety of Bitcoin
Bitcoin's safest feature is a decentralised blockchain which is censorship resistant. No one country or any one third party has control over the Bitcoin network. When compared to traditional finance, this is significantly different as there isn’t a single point of failure which a hacker could exploit (such as your Bank, Paypal account or Credit Card). However, as Bitcoin is a digital currency, there is always a possibility for to perform illegal transactions by moving assets from one country to another, which could bewhy regulation is present in many countries today, especially those who don't want to make it easy for their residents to send money out of the country overseas.
At the time of writing 27th August 2018, the Australian Taxation Office (ATO) does not consider Bitcoin to be money or Australian currency or any other foreign currency. However, there are necessary laws in place to prevent unsafe or illegal activity. Bitcoin is also considered to be an asset and therefore, capital gains tax could be applicable depending on your tax classification. We recommend you consult with your account to discuss which classification you may fall under and any tax implications which may arise in the future so you can clearly report your cryptocurrencies moving forward.
Keeping Your Bitcoin Safe
If you have the right knowledge and the right practices to keep your Bitcoin safe, then your assets could be as secure as other financial channels, if not more secure. To help you we have written a separate guide on how to keep your Bitcoin and cryptocurrencies safe and explain the differences between a paper wallet, hot wallet and cold wallet.
Overall, based on the current Australian laws for governing cryptocurrency, there doesn’t appear to be enough evidence to label Bitcoin as illegal (at time of writing). However, some countries have placed a ban on cryptocurrency, so it all varies depending on your country and state. For the most part, many people would considerBitcointo be relatively safe as long as it is not being used for illegal purchases or activities.