Australia’s government is planning to roll out new legislation on January 1, 2020. The new regulations are intended to curb large cast transactions designed to skirt the law, but the new draft bill makes an exception for transactions made with digital currency.
The news is generally great for cryptocurrency enthusiasts but Australia actually has a mixed track record in terms of its acceptance of digital currencies. Even this recent bit of news is causing confusion.
The draft bill explanatory document reads the following:
Broadly, the payments not subject to the cash payment limit are:
- payments related to personal or private transactions (other than transactions involving real property);
- payments that must be reported by an entity under anti-money laundering and counter-terrorism legislation, provided, broadly, the entity with a reporting obligation complies (or is reasonably believed to have complied) with their obligations under that legislation;
- payments made or accepted by a public official in which the public official is legally required to make or accept a cash payment in the course of their duties;
- payments that only exceed the cash payment limit because the payment is part of a transaction involving collecting, holding or delivering cash and this is undertaken in the course of an enterprise of collecting or delivering cash (i.e., providing cash-in-transit services);
- payments that only exceed the cash payment limit because payment is or includes an amount of digital currency;
- payments that occur in situations where no alternative method of payment could reasonably be used.
The second last bullet point in the above paragraph is the important one. It mentions that payments exceeding the $10,000 AUD limit using digital currency will be exempt from the policy.
However, page 7 of the actual Exposure Draft defines digital currency as cash, which implies there would be no exemption:
Presumably because the explanatory memorandum came after the draft, one clarifies the other. The problem with this assumption is that Australia’s government has a mixed history in redulating crypto.
In fact just a few months ago, the Australian Tax Authority sent out a notice to exchanges demanding information on cryptocurrency investors potentially evading taxes.
Criminal Cryptocurrency Activity Is Low
Australia’s stance on limiting large cast transactions exceeding $10,000 seems to be part of a broader initiative. To prevent crime, rather than an intentional attempt to discourage the use of cryptocurrencies. Lawmakers in the country have in fact recently stated that the use of cryptocurrencies in criminal activity is actually negligible.
This new draft bill is not dismissing Bitcoin or other digital currencies.It’s really protecting the Australian government from tax evaders.
It makes sense given the current climate of the economy, the crypto industry and the fact that many other governments are doing the same thing. Germany for example is putting plans in place to enact a similar policy. The difference is, the transaction limit would be €2,000 or less. The current limit in Germany is much like Australia’s. It stands at €10,000.
More of this kind of news will be coming out across the world. It seems as though the creation of Facebook’s controversial Libra project is making more and more governments intent on clearing up regulations surrounding what is acceptable and what is not regarding the use of cryptocurrencies.
So for now, take the news out of Australia as good news. It appears cryptocurrency is exempt from the new draft bill. Unless you’re trying to evade taxes.