Crypto license in Australia

In Australia, cryptocurrencies are regulated by two bodies: the Australian Securities and Investments Industry Committee (ASIC) and the Australian National Transfer Reports and Analysis Center (AUSTRAC). Each of them performs its specific functions aimed at ensuring the stability of the cryptocurrency market and protecting its participants.

Australian Securities and Investments Commission (ASIC)
This is the government body responsible for regulating all financial services in Australia, including the cryptocurrency industry. Ranked among the world’s trusted regulators, ASIC issuing licenses is a mark of trust that companies can be considered reliable. The functions and powers of the Commission are set out in the ASIC Act 2001.

Under the legislation, ASIC is responsible for the registration of financial and cryptocurrency service providers and manages the publicly available registers of legal entities in the country. This regulator has the power to prohibit the activities of companies that violate the applicable laws and initiate legal proceedings against them. ASIC investigates financial irregularities and has the right to impose fines and prosecute individuals and legal entities that have committed violations.

Other important ASIC functions include:

• monitoring cryptocurrency and financial transactions;
• tracking news in monitored companies;
• monitoring of capitalization indicators;
• analyzing the balance of payments, etc.

In addition, the commission influences regulatory changes to improve the efficiency and transparency of financial markets.

National Transfer Reporting and Analysis Center (AUSTRAC)
This body, part of Australia’s financial intelligence agency, has been in operation since 1989. Its responsibilities include combating money laundering and countering the financing of terrorism and other criminal activities.

The activities of the regulatory body are set out in the Anti-Money Laundering and Terrorist Financing Act 2006 and the Financial Transaction Reports Act 1988. The Australian government has granted AUSTRAC enforcement and investigative powers over persons involved in suspicious activity. Since 2017, this regulator has required cryptocurrency companies to follow its AML/CFT program guidelines.

Legal framework for crypto-business in Australia
Currently, there is no specific regulatory framework for cryptocurrencies in Australia. Legislation is applied to cryptoassets depending on their functional characteristics.

For example, cryptocurrency financial services companies must have a financial license. If tokens representing financial products are traded on exchanges, a cryptocurrency exchange operator may need a broker license.
It is therefore important to correctly identify the nature of the cryptocurrency being used to apply the appropriate governing legislation to it. Our experts are happy to provide more detailed advice on the aspects of applicable law in your particular case.

Since 2009, Australia has had a Code of Conduct for Virtual Currencies, which sets out basic standards of behavior in the blockchain market. This code addresses various aspects such as customer and staff safety, anti-money laundering, and other issues.

At the state level, decentralized virtual currencies were recognized in 2017 with regulatory changes to the Anti-Money Laundering and Combating the Financing of Criminal Organizations (AML/CFT) framework. Under the AML/CFT law, companies conducting cryptocurrency activities are required to develop and implement policies, standards, and procedures for customer identification, transaction monitoring, and suspicious transaction reporting. Entrepreneurs interested in obtaining a crypto license in Australia must have systems in place to monitor and manage financial crime risks.

Australian regulators are also governed by other laws under the ongoing framework, which includes:

• Competition and Consumer Act 2010 – prohibits misleading consumers and offenders such as issuers, sponsors and other market participants are subject to prosecution;
• Corporations Act 2001 – regulates the provision of financial services. Under the legislation, crypto assets that are part of an investment or exchange-traded product require a license to provide financial services in Australia;
• National Consumer Credit Protection Act 2009 – establishes a credit activities and services regime whereby a credit license is required for cryptocurrency lending;
• Electronic Transactions Act 1999 – regulates electronic transactions, including self-executing transactions using blockchain or distributed ledger technology.

In October 2023, the Australian government introduced a draft regulatory framework for the cryptocurrency industry. It includes licensing and custody rules for cryptoasset providers. According to the bill, cryptocurrency exchanges and brokers seeking a financial services license from ASIC will have to meet several requirements. One of them is to have at least $5 million on the platform or $1,500 in each customer’s account. The bill also includes some of the world’s first rules for central bank digital currencies (CBDCs) and also looks at reducing the tax burden, including the amount of capital gains tax and providing incentives for renewable energy miners.

According to the latest reports, Australia plans to pass the bill in 2024. Once it is passed, exchanges will have 12 months to transition to the new regime under the law.

In Australia, cryptocurrency is generally taxed as property.

Highlights of cryptocurrency taxation:

Buying and holding cryptocurrency
Buying cryptocurrency with fiat money (e.g. AUD) is tax-free, as is storing it.

Selling cryptocurrency
Gains from the sale of cryptocurrency are subject to capital gains tax. Losses from the sale of cryptocurrency can be deducted from taxable income.

Cryptocurrency mining
Income from cryptocurrency mining is subject to income tax as ordinary income. Cryptocurrency mining expenses can be deducted from taxable income. Capital gains tax also applies to the mining and subsequent sale of tokens. It is levied on the difference between the price at the time of mining and the price at the time of sale.

Record-keeping requirements
It is important to keep accurate records of all cryptocurrency transactions, including details of acquisition, disposition, and any associated costs, to correctly calculate your tax liability.

Capital gains tax rates
The tax rate depends on your income:

• for income between $0 and $18,200, a 0% tax rate applies;
• for income between $18,201 and $45,000, a 0% tax rate applies, and a 19% tax rate applies on amounts over $18,200;

• for income between $45,001 and $120,000, a tax rate of $5,092 plus 32% on the amount over $45,000 applies;
• for income between $120,001 and $180,000, a tax rate of $29,467 plus 37% of the amount over $120,000 applies;
• for income of $180,001 or more, a tax rate of $51,667 plus 45% of the amount over $180,000 applies.

Australian residents receive a 50% tax rebate when holding cryptocurrency for 12 months or more.

There are also several tax benefits for non-residents. Here are the instances in which you can avoid paying cryptocurrency tax in Australia:

Receiving cryptocurrency as a gift;

• receiving cryptocurrency through mining as part of a hobby;
• transferring cryptocurrency between your wallets, provided you follow transaction fees;
• buying goods and services with cryptocurrency for personal use;
• donating cryptocurrency to registered charities with Deductible Gift Recipient (DGR) status.

For more information on the taxation of cryptocurrencies, please refer to the Cryptocurrency Taxation Guide released by the Australian Taxation Office (ATO).