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Crypto license in Australia

In Australia, unlike some other jurisdictions, the local authorities not only support cryptocurrency transactions but also actively work on creating more transparent and understandable business legislation. The team of experts from Gofaizen & Sherle is ready to assist in registering a cryptocurrency company and obtaining a license for cryptocurrency activity in this country.

The active growth of the cryptocurrency market around the world attracts more and more entrepreneurs who express interest in its development. Various jurisdictions offer investors excellent conditions for launching a crypto business. Among the countries with high prospects in the blockchain sector, Australia stands out.

Since 2017, cryptocurrencies and exchanges have been legal in this jurisdiction, with one in five residents (18% of the population) owning a cryptocurrency. In Australia, cryptocurrencies are treated as property and can be legally sold, bought, stored, and used in everyday transactions. The economic conditions and factors in the country provide sustained support for the development of technological innovation in various areas such as payments, cryptoassets, lending, investment, and custodial services. This creates a favorable environment for companies and entrepreneurs wishing to innovate in these areas.

The Australian government is actively introducing cryptocurrencies into various spheres of life, making the country one of the leaders in this field. Government support led to the introduction of DeFi technology research centers, with notable projects implemented. Australia also allows the use of cryptocurrency for paying taxes and saving for retirement. A few years ago, Australian banks created the first-ever blockchain product for commercial banking in the country, demonstrating the growth of digital banking guarantees. The large number of cryptocurrency ATMs emphasizes the high popularity of cryptocurrencies in Australia.

The government ensures the safety of cryptocurrency transactions by taking several legal measures to regulate the blockchain sector in the country. One of these measures is to obtain a license to conduct financial activities in Australia. This authorization document gives legality to any business activity related to finance, including the use of cryptocurrency.

The Australian government recognizes the potential of cryptocurrencies and actively encourages innovation, fostering the growth of the blockchain industry in the country. Entrepreneurs wishing to engage in cryptocurrency business in this jurisdiction can access various benefits. However, it is only possible to take full advantage of them after completing the licensing process.

Advantages of obtaining a crypto license in Australia

Legal recognition

A license in Australia provides legal recognition to businesses involved in cryptocurrency operations. This increases the legitimacy of such businesses and their operations and reduces the risk of legal issues associated with operating in the crypto space.

Government support and innovation

The Australian government actively supports blockchain and cryptocurrency innovation. Holding a license can provide companies with access to government grants, incentives, or support programs aimed at promoting technological advances in the sector.

Widespread use of blockchain technology in Australia

The Australian government is actively implementing cryptocurrencies in various areas, making the country a leader. Banks are incorporating blockchain into commercial transactions, forming digital bank guarantees. Australia is leading the way in DeFi projects and authorizes the use of cryptocurrency for tax payments and retirement savings.

Regulatory compliance

To obtain and renew a license, businesses are required to comply with established regulatory standards set by the Australian government. This ensures compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) policies.

Access to banking services

With a license, a company is more likely to have access to banking services as financial institutions are more willing to engage with businesses operating in a regulated environment. This facilitates smoother financial transactions and activities.

Competitiveness in the market

Having a license contributes to a competitive advantage in the market. It differentiates licensed participants from unregulated competitors and positions them as trustworthy and compliant participants in the rapidly changing world of cryptocurrencies.

Developing international markets

Having a license contributes to a competitive advantage in the market. It differentiates licensed participants from unregulated competitors and positions them as trustworthy and compliant participants in the rapidly changing world of cryptocurrencies. Once officially recognized, you will be able to expand your services globally by entering international markets.

Find more information about the Australia crypto license

Requirements for Obtaining a Crypto License in Australia

Currently, obtaining a license to operate cryptocurrency transactions in Australia requires compliance with regulatory requirements set by ASIC and AUSTRAC. As of today, some common requirements include:

  • Business registration. Before applying for a cryptocurrency license, you must register your business with ASIC. This includes choosing the appropriate legal form of organization such as a company, partnership, or trust.
  • AUSTRAC compliance. If your business deals in digital currencies, it must register with AUSTRAC as a digital currency exchange service provider. This registration involves compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) requirements. You will need to implement robust customer identification (KYC) and AML procedures, including customer identification, transaction monitoring, and suspicious transaction reporting to AUSTRAC.
  • Application for an Australian Financial Services (AFS) License. If your business provides financial services, such as trading or providing investment advice on digital currencies, you need to apply for an Australian Financial Services (AFS) license from ASIC. To obtain this license, you need to demonstrate compliance with financial legislation and meet various organizational and operational requirements.
  • Financial strength – the company must have sufficient capital and liquidity.
  • Business reputation – the company and its management must have a good business reputation.
  • Competence – the company’s personnel should have the necessary knowledge and experience.
  • Contingent Provisioning and Insurance. Your business should have adequate contingent security plans and professional liability insurance to mitigate operational risks and protect consumers in the event of financial loss.
  • Technical security and risk management. You will need to implement robust cybersecurity measures and risk management frameworks to protect your platform and user assets from cyber threats and vulnerabilities.

However, as of March 2024, crypto regulation is in a state of transformation and it is important to consult with our legal experts, or independently check the latest regulations on the ASIC and AUSTRAC websites for up-to-date information. For our part, we can ensure that the professionals at Gofaizen & Sherle will guide you through the process of obtaining a license in Australia and help ensure full compliance with applicable laws and regulations.

Packages of services for Crypto license in Australia

ADVANCED

Registration of VASP under the full regulatory requirements

15 900$
  • Full turnkey company formation
  • Address of registration for 1 year
  • Developed AML/KYC Policy
  • AUSTRAC license
  • Apostilled corporate documents
  • Bank account opening assistance
BASIC

Registration of VASP under the minimum regulatory requirements

10 900$
  • Full turnkey company formation
  • Address of registration for 1 year
  • Corporate documents in English
  • Standard AML/KYC Policy
  • Registration of VASP activities AUSTRAC
Fedor Cid
Senior Associate, Consultant
Mark Paat
Sales Assistant

The process and timeline for obtaining a crypto license in Australia

As of March 2024, there is still no definitive process and timeline for crypto-licensing in Australia, as the legislation governing cryptocurrency activity is still under development. A draft regulatory framework for the cryptocurrency industry was submitted in late 2023, but final decisions and licensing details will likely not be announced until late 2024 or later. The Australian Securities and Investments Commission (ASIC) is expected to be the licensing authority for cryptocurrency businesses such as exchanges and brokers.

As for the current legislation, businesses, which include digital currency exchanges, need to register with AUSTRAC as a digital currency exchange service provider. In addition, companies that provide financial services such as trading or providing investment advice on digital currencies need to apply for an Australian Financial Services (AFS) license from ASIC. This legal document allows a company to provide various financial services within Australia.

Application for an AFS license is made online through the ASIC portal. Several documents must be attached to the application, which includes:

  • business description – information about the company, its owners, management, and services offered;
  • financial information – audited accounts, business plan;
  • personnel information – information about the qualifications and experience of employees;
  • systems and controls – a description of risk management and compliance systems.

ASIC may request additional information or conduct an audit of the company.

The application process can take 3-6 months.

If ASIC approves the application, the company is granted an AFS license, which is valid for 12 months and must be renewed.

In addition to the AFS license, which is suitable for companies providing a wide range of crypto services, there is an Australian credit license (required for cryptocurrency products), and an insurance license (required for crypto insurance products).

Open a Crypto Company in Australia

COLLECTION OF PRELIMINARY DOCUMENTS

2 weeks

Step 1

Documents required:

  • Preferred company name
  • Passport copies of all shareholders (at least 2) and directors (notarized + apostilled)
  • Address of residence confirmation (utility bill) from all directors and shareholders
  • Power of attorney (notarized + apostilled)
  • A business model of the company (brief description 1-2 pages)

REGISTRATION AND LICENSING PROCESS

3-4 months

Step 2

  • Company registration
  • Preparation of corporate documents
  • Receiving additional information about the client’s business (to identify risk appetites, the geography of the customers, nature of the business, etc.) and development of AML/KYC policies tailored to the client company’s cryptocurrency operations
  • Submitting application for the license to Australian authorities and communication in the course of license issuance

CORPORATE ACCOUNT OPENING

4-6 weeks

Step 3

  • Analysis of the most suitable Banks/EMIs, comparison of the risk appetite of the Bank in relation to the risk appetite of the Client based on previously prepared AML policies
  • Collection of necessary documents from the Client side to initiate the process (flow of funds, source of wealth, description of the purpose of opening an account, key partners, company website, utility bill, etc.)
  • Guiding the Client’s company through the entire process of opening an account

Request more information about the Australia crypto license

Required documents

Entrepreneurs who are interested in obtaining a license to allow financial transactions with cryptocurrency in Australia must provide the Regulator with a set of documents including, among other things:

  • a business plan that will help the commission understand the company’s goals, strategies, and financial projections, and ensure that the applicant understands the risks of the cryptocurrency industry;
  • transaction rules that contain all the details of cryptocurrency transactions. This document should show how the company is going to identify customers, report suspicious transactions, and so on;
  • evidence of financial stability, so that the Regulator can make sure that there is a sufficient financial reserve to ensure the efficient operation of the company and cover possible risks;
  • CVs of founders, beneficiaries, and managers of the company, including passport data and information on work experience, education, criminal record, and other information.

A full list of documents can be obtained from Gofaizen & Sherle specialists.

Regulation of cryptocurrencies 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.

Taxation in Australia

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).

FAQ about the Crypto license in Australia

How do I get a crypto license in Australia?

As of March 2024, there is no crypto license in Australia as the relevant legislation is still being drafted and approved. To legally operate a crypto business in this jurisdiction, you will need to:

  • register your business with ASIC;
  • register with AUSTRAC;
  • obtain a financial services license;
  • prepare documentation and comply with AML/CTF requirements;
  • ensure compliance with ASIC’s financial requirements;
  • implement security measures.

Given the changing legislation, we recommend that you seek legal advice from our cryptocurrency regulatory specialists to ensure full compliance with applicable laws and regulations.

Are there crypto regulations in Australia?

Yes, there is regulation of cryptocurrencies in Australia. The main regulatory bodies are the Australian Securities and Investments Commission (ASIC) and the Australian Money Transactions Analysis and Reporting Center (AUSTRAC). At the same time, a specific legislative framework for crypto-business is still under development.

Do you need a license to trade crypto in Australia?

As of March 2024, you do not need a special license to trade cryptocurrency in Australia. Currently, there is no special license for cryptocurrency trading. However, the regulatory framework is still under development.

What’s the new crypto law in Australia?

In October 2023, the Australian Treasury released a draft outlining the regulatory framework for cryptoasset providers. The new cryptocurrency law in Australia is still in draft form and focuses on licensing, custody, CBDC and potentially offering tax incentives for certain cryptocurrency activities. The new law is expected to come into force by the end of 2024.

Is crypto taxed in Australia?

Yes, cryptocurrencies are taxable in Australia. The Australian Taxation Office (ATO) treats cryptocurrency as property and cryptocurrency transactions are generally subject to capital gains tax (CGT) or other applicable taxes.

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