Australian Government to Overhaul Payments Systems; Will Introduce Crypto Framework

The Australian government will regulate cryptocurrencies as part of an overhaul to the payment systems in Australia.

The proposed regulations will cover cryptocurrency taxes, investor protection from criminals, and ways to regulate digital banks, cryptocurrency exchanges, and brokers.

“The government can’t guarantee your crypto any more that it can guarantee a painting or a share in a company, and nor should it,” said Financial Services Minister Jane Hume. She then went on to say that despite this, there are ways to make Australian crypto firms operate within a safer, better, and more secure regulatory framework.

Australian Treasurer Josh Frydenberg highlighted the new regulatory reforms in December, adding that the Morrison administration is looking to make the most significant changes to payment systems throughout Australia over the next 25 years.

“If we do not reform the current framework, it will be Silicon Valley that determines the future of our payment system. Australia must retain sovereignty over our payment system,” Frydenberg opined earlier this year.

Senator Andrew Bragg filed a parliamentary report on the cryptocurrency sector, proposing changes to current legislation that do not suit the cryptocurrency industry.

Government to publish key papers

The Australian government will release three crucial documents before it begins consulting with key players in the crypto sector. One of the documents is a paper soliciting input from industry stakeholders on the correct approach to licensing and crypto custody.

One of the early ideas proposed by the Treasury had been to compel exchanges to hold crypto assets within the borders of Australia.

The government will also publish the terms of reference for two unrelated inquiries into the crypto sector by the national competition and financial oversight agencies. The bodies are investigating the “debanking” in fintech, where a bank ceases to offer or continue offering a service to a customer.

Crypto tax on the cards

Australia’s Board of Taxation will scrutinize a policy proposal dealing with the taxation of digital assets and transactions in Australia. It will submit a report in its findings to the government at the end of 2022. The Morrison administration says that the Board of Taxation will need to craft the taxation regulations such that it doesn’t burden citizens with more tax.

A survey run in 2021 pointed out that a quarter of Australians had owned or previously owned virtual currencies, making the country one of the largest per capita adopters of digital assets.

The Morrison administration is looking to implement new regulations by the end of 2022.

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