Australia Plans Crypto Taxation as Government Gears to Reform Payment Laws

Australia is rallying towards regulating the crypto industry with the government mulling on taxing the crypto sector. The country is planning to refresh laws around its payment systems and the government wants to ensure the protection of crypto investors in the nation. Out of the three documents that the Australian government is expected to unveil, one will likely be dedicated to outlining details on licensing and custody of crypto assets. The Australian Treasury has suggested that crypto exchanges must store assets of Australian investors within the country boundaries.

Australia's Board of Taxation (BoT) has been directed to present a comprehensive report to the government by the end of 2022. The authorities have been asked to keep the tax burden on crypto investors as minimum as possible, News Australia reported on Sunday.

Jane Hume, the finance services minister of Australia, intends to make sure that all crypto players adhere to the regulatory ecosystem that is being shaped up.

“The government can't guarantee your crypto any more than it can guarantee a painting or a share in a company, and nor should it. But we can make sure Australian exchanges, custodians and brokers work within a regulatory framework that is better, safer, and more secure,” Hume as saying.

Industry insiders have also been asked to submit proposals and approaches to be part of the upcoming legal changes.

Unlike China, the crypto sector is not banned in Australia. People can hold and trade in cryptocurrencies, in addition to the allowance to mine them. However, crypto assets are not used as payment alternatives in Australia.

Australia has the third highest rate of crypto adoption in the world, a survey report by Finder claimed in January.

Bitcoin is the leading cryptocurrency in Australia and diversifying investment portfolio is the main reason why people are investing in cryptocurrencies there, research firm Statista says.

The country's progression towards regulating the crypto sector, hence, does not seem surprising.

It does, however, adds weight to the list of countries that are approaching the digital assets space, with a regulate-over-restrict approach. In recent days, Dubai got approvals for its crypto laws, US President Joe Biden signed executive orders on the government oversight of the cryptocurrency industry, and the EU ruled against Bitcoin ban.

Earlier in February, India also announced taxation on the crypto sector. Finance Minister Nirmala Sitharaman announced a 30 percent tax on income generated from the transfer of virtual digital assets during the 2022 Budget Session.