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In Australia, unlike other places, the government not only supports cryptocurrency transactions but is also working on making business laws clearer and easier to understand. The team at Alparanjo is ready to help with setting up a cryptocurrency company and getting a license to operate in this area.

The global rise of cryptocurrency is attracting more and more entrepreneurs. Different countries offer great opportunities for starting a crypto business, and Australia is one of the top choices. Since 2017, cryptocurrencies and exchanges have been legal in Australia, and about 18% of the population owns cryptocurrency. Cryptocurrencies are treated as property here, meaning they can be legally bought, sold, stored, and used in daily transactions. Australia’s economy supports innovation in areas like payments, crypto assets, loans, investment, and security services, which makes it a great place for companies and entrepreneurs to work on new ideas.

The Australian government is actively integrating cryptocurrencies into different parts of life, making the country a leader in this field. They have set up research centers for DeFi (decentralized finance) technology and allow people to use cryptocurrency for paying taxes and saving for retirement. Australian banks even created the first blockchain-based product for commercial banking. The presence of many cryptocurrency ATMs shows how popular cryptocurrencies have become here.

To ensure safe cryptocurrency transactions, the government has put several laws in place to regulate the blockchain sector. One of these is the need to get a license for financial activities, including using cryptocurrencies. Australia recognizes the potential of cryptocurrencies and encourages innovation, helping the blockchain industry grow. Entrepreneurs who want to start a cryptocurrency business here can benefit from the supportive environment, but they need to complete the licensing process to fully enjoy these benefits.

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Advantages of obtaining a Crypto License
in Australia

  • Legal recognition: A license in Australia gives legal status to businesses working with cryptocurrency. This helps make these businesses look more trustworthy and reduces the chance of legal problems.

  • Government support and innovation: The Australian government supports new ideas in blockchain and cryptocurrency. Having a license can help businesses get access to government grants or programs that encourage technological advancements.

  • Widespread use of blockchain technology in Australia: Australia is a leader in using blockchain technology. Banks are using it for digital bank guarantees, and the government allows cryptocurrency for things like tax payments and retirement savings. The country is also leading in DeFi (decentralized finance) projects.

  • Regulatory compliance: To get and keep a license, businesses must follow rules set by the Australian government, including laws that prevent money laundering and terrorism financing.

  • Access to banking services: Licensed companies are more likely to get banking services because banks prefer to work with businesses that follow regulations. This makes financial operations smoother.

  • Competitiveness in the market: Having a license gives businesses an edge over unregulated competitors, showing they are trustworthy and follow the rules in the fast-changing crypto world.

  • Developing international markets: With a license, businesses can expand globally and enter international markets because they are officially recognized and compliant.

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Australia Crypto license

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Requirements for obtaining a Crypto
License in Australia

To get a license to operate cryptocurrency transactions in Australia, you need to follow
the rules set by ASIC and AUSTRAC. As of today, here are some of the key requirements:

  • Register your business: Before you can apply for a cryptocurrency license, you must register your business with ASIC. You will need to choose the right legal structure, like a company, partnership, or trust.
  • Comply with AUSTRAC: If your business involves digital currencies, you must register with AUSTRAC as a digital currency exchange service provider. This means following anti-money laundering (AML) and counter-terrorist financing (CTF) rules. You will need to identify your customers, monitor transactions, and report suspicious activity to AUSTRAC.
  • Apply for an AFS License: If your business offers financial services like trading or investment advice for digital currencies, you must apply for an Australian Financial Services (AFS) license from ASIC. To get this, you need to follow financial laws and meet certain business and operational requirements.

    • Your business must have enough money and liquidity.

    • You and your management must have a good business reputation.

    • Your team should have the necessary skills and experience.

  • Risk management and insurance: Your business should have plans to deal with risks and insurance to protect against potential financial losses.
  • Technical security: You must have strong cybersecurity and risk management to protect your platform and customers from online threats.

Keep in mind that as of March 2024, crypto regulations are changing. It’s important to check the latest updates on the ASIC and AUSTRAC websites or consult with legal experts. At Alparanjo, we can guide you through the process and ensure your business complies with all the rules.

Procedure and Timeline for obtaining a Crypto License in Australia

As of March 2024, there is no clear process or set timeline for getting a cryptocurrency license in Australia because the rules are still being worked on. A draft of the regulations was shared in late 2023, but the final decisions and details about licensing may not be available until late 2024 or later. The Australian Securities and Investments Commission (ASIC) is expected to handle the licensing for cryptocurrency businesses like exchanges and brokers.

Right now, businesses, including digital currency exchanges, must register with AUSTRAC as a digital currency exchange provider. Companies offering services like trading or investment advice on digital currencies need to apply for an Australian Financial Services (AFS) license from ASIC. This license allows them to provide financial services in Australia.

The AFS license application is done online through the ASIC portal. You need to submit several documents, such as:

  • Business description: Details about the company, owners, management, and services.

  • Financial information: Audited accounts and a business plan.

  • Personnel information: Qualifications and experience of employees.

  • Systems and controls: Risk management and compliance details.

ASIC might ask for more information or audit the company.

The process to get the license can take 3-6 months. Once approved, the AFS license is valid for 12 months and must be renewed.

Besides the AFS license, there are other licenses like an Australian credit license (for cryptocurrency products) and an insurance license (for crypto insurance products).

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Taxation in Australia

In Australia, cryptocurrency is taxed like property.

Key points about cryptocurrency taxes:

  • Buying and Holding Cryptocurrency: Buying cryptocurrency with regular money (like AUD) is not taxed. Simply storing your cryptocurrency is also tax-free.

  • Selling Cryptocurrency: When you sell cryptocurrency, you may have to pay capital gains tax on any profit. If you lose money, you can reduce your taxable income.

  • Mining Cryptocurrency: Income from mining cryptocurrency is taxed like regular income. You can deduct your mining costs from your taxable income. If you sell the mined cryptocurrency, capital gains tax applies to the difference between the price when mined and the selling price.

  • Keeping Records: It’s important to keep clear records of all cryptocurrency transactions, including how you got it, sold it, and any related costs. This will help with calculating taxes correctly.

  • Capital Gains Tax Rates: Tax rates depend on how much you earn:

    • Income from $0 to $18,200: 0% tax.

    • Income from $18,201 to $45,000: 0% on the first $18,200, then 19% on the amount over $18,200.

    • Income from $45,001 to $120,000: $5,092 plus 32% on the amount over $45,000.

    • Income from $120,001 to $180,000: $29,467 plus 37% on the amount over $120,000.

    • Income of $180,001 or more: $51,667 plus 45% on the amount over $180,000.

Australian residents get a 50% tax discount if they hold cryptocurrency for 12 months or longer.

Ways to Avoid Cryptocurrency Taxes:

  • Receiving cryptocurrency as a gift & Mining cryptocurrency as a hobby

  • Moving cryptocurrency between your own wallets (if you track transaction fees)

  • Using cryptocurrency for personal purchases

  • Donating cryptocurrency to registered charities with DGR (Deductible Gift Recipient) status.

Any Questions

Frequently Asked Questions

Yes, cryptocurrencies are regulated in Australia. The main organizations overseeing them are the Australian Securities and Investments Commission (ASIC) and the Australian Money Transactions Analysis and Reporting Center (AUSTRAC). However, laws specifically for crypto businesses are still being worked on.

In October 2023, the Australian Treasury shared a draft plan for regulating crypto providers. The law is still being worked on and will focus on licensing, storing crypto safely, and possibly offering tax benefits for certain activities. It should be in effect by the end of 2024.

Yes, cryptocurrencies are taxed in Australia. The Australian Taxation Office (ATO) treats crypto like property, so crypto transactions are usually subject to capital gains tax (CGT) or other taxes.

As of March 2024, there is no specific crypto license in Australia since the laws are still being finalized. To run a crypto business legally, you must:

  • Register your business with ASIC

  • Register with AUSTRAC

  • Get a financial services license

  • Meet anti-money laundering (AML) and counter-terrorism financing (CTF) rules

  • Follow ASIC's financial guidelines

  • Have proper security in place

Since the laws are still changing, it's best to get advice from a legal expert in cryptocurrency regulations.

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