Over the past several years, Australia has seen an explosive growth of cryptocurrency companies. To date, the government adheres to the position of regulating the crypto sector based on the principle of non-interference. This allows the sector to grow at a faster pace and provides a huge incentive for those seeking to register a crypto company in Australia. Currently, Australian law does not equate digital currency with fiat and does not consider cryptocurrency as money.
As of now, the RBA, the country’s central bank, isn’t planning on issuing any digital currencies. According to the bank’s senior management, the emergence of new technologies related to cryptocurrencies can challenge traditional financial institutions & negatively impact conventional payment systems.
Entrepreneurs seeking to launch an ICO in Australia should keep in mind that they’re required to comply with a special AML law. Passed in 2017, it introduced cryptocurrencies & tokens into the Australian AML/CFT regime & is now mandatory for all crypto asset investors.
Regulatory Framework
Recent years have seen the country’s parliament pass numerous legislative amendments relating to cryptocurrencies. However, the main emphasis was not on cryptocurrencies themselves but on obtaining a cryptocurrency exchange license in Australia.
According to ASIC, Australia's main financial regulator, legislative obligations & regulatory requirements are technologically neutral. Although there isn’t yet legislation in place regarding cryptocurrencies, this does not preclude their inclusion in existing supervisory regimes provided for by Australian law.
ASIC's recently updated regulatory guide reveals its approach to the status of tokens. According to it, the legal status of such coins depends on how they are structured, what rights are assigned to them, and which regulations must be observed by enterprises. Cryptocurrency transactions in Australia are subject to the country's financial services regulatory regime.
Currently, Australia has no specific rules regarding blockchain technology or DLT. However, a newsletter issued by ASCI outlines the organization’s approach to regulatory issues that may arise due to implementation of blockchain technology in Australia. According to it, enterprises using blockchain technology must have proper organizational competence & adequate technological resources. They should also have in place risk management plans & be ready to promptly respond to any emerging issues.
Using Smart Contracts for Cryptocurrency Activities in Australia
Various cryptocurrency companies are increasingly making use of smart contracts. Under the ETA Law, entering into smart contracts in Australia is perfectly legal, provided that they comply with all the requirements of a traditional legal contract.
Obtaining a Cryptocurrency License in Australia
The question of whether cryptocurrency is a financial product and, therefore, entails licensing and disclosure requirements for financial services, is periodically raised by individuals & companies operating in the cryptocurrency industry. And the answer to it is pretty simple: if there is financial activity in Australia, then such companies must apply for a financial services license in Australia with AFSL.
According to Australian law, services related to virtual currencies are defined as “financial product”. Therefore, obtaining a financial services license in Australia is a prerequisite for working with ICOs. Interested in registering a cryptocurrency company in Australia? IQ Decision UK is the answer. Sign up for a consultation on the regulation of cryptocurrency business in Australia & get all the legal help you need.
