Australia targets position as cryptocurrencies hub by 2022

By Raffaele Redi

Australia aims to sharpen its competitiveness as a technology and financial hub in the area

Bitcoin on Australia (map). Regulations of cryptocurrency in Australia concept.                                 
Australia aims to exploit the potential economic opportunities of cryptocurrencies - Photo: Shutterstock.

Australia aims to increase its competitiveness as a technology and financial hub in the region, as the local Senate is set to introduce new regulations for digital assets.

These include a 10% tax discounts for sustainable miners and a licensing regime for crypto exchanges, to exploit the potential economic opportunities of cryptocurrencies.

A report published by the Senate’s Committee on Australia as a Technology and Financial Centre on Wednesday, sees the committee recommending the Australian Government to establish a Global Markets Incentive.

The aim is to replace the Offshore Banking Unit regime by the end of 2022, as it was not well suited to become directly applicable to cryptocurrencies.

The committee’s recommendations covered crucial points of the cryptocurrency industry, such as licensing and tax arrangements for miners and exchanges while guaranteeing the security and privacy of users.

The committees also explored the opportunity for Australia of issuing a Central Bank Digital Curency (CBDC).

The committee recommendations

Despite a significant number of Australians already investing in cryptocurrencies and other digital assets, the digital assets sector is still poorly understood by regulators and governments in the country, the report states.

“The committee has sought to help rectify this throughout this phase of its inquiry, by engaging extensively with businesses and peak bodies in the digital assets sector, as well as academics and regulators,” according to the report.

The committee recommended the Australian Government establish a market licensing regime for digital currency exchanges. This includes capital adequacy, auditing and responsible person tests, as well as a custody or depository regime for digital assets with minimum standards under the Treasury portfolio.

The recommendations included conducting a token mapping exercise to determine the best way to characterise the various types of digital asset tokens in Australia, establishing a new decentralised autonomous organisation company structure.

Tax regime, miners and the Australian CBDC

According to the committees, Australian Capital Gains Tax (CGT) regime should be amended so that digital asset transactions only create a CGT event when they genuinely result in a definable capital gain or loss.

Other amendments regarded businesses undertaking digital asset mining and related activities in Australia. They would receive a company tax discount of 10% per cent if they source their renewable energy for these activities according to the report.

The committees also recommended that the Treasury lead a policy review of the viability of a retail Central Bank Digital Currency in Australia while increasing certainty and transparency around de-banking.

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