While Australia is not yet commonly known as a global blockchain hub, it is clear that recent government policies are looking to change that.
National Blockchain Strategy
On 18 March 2019, the Australian government announced the launch of a national blockchain strategy. The strategy includes a roadmap focusing including regulation, skills and capacity building, innovation, investment, and international competitiveness and collaboration. It also comes with a $100,000 funding boost, which will sponsor Australian companies joining the Australian Trade and Investment Commission (Austrade)’s mission to the Consensus blockchain conference in New York City, described as a “landmark event for the blockchain industry”.
The Australian Transaction Reports and Analysis Centre (Austrac), a government financial intelligence agency, has partnered with the Swinburne University of Technology in Melbourne to trial the use of blockchain and smart contract technology to help multiple actors automate their international fund transfer instructions (IFTIs) reporting to Austrac. Work on the blockchain proof-of-concept (PoC) for IFTI reporting automation began in December 2018.
Fintech and Cryptocurrency
With Melbourne and Sydney both ranked in the top ten global financial centres, Australia is a strong global player in Fintech. Recognising the significant growth opportunity offered by Fintech but also its cross-border nature, the Australian government recently signed the UK- Australia FinTech Bridge (March 2018). The agreement aims to foster:
• Collaboration between governments to identify Fintech trends and improve policy response;
• Sharing expertise between regulators, facilitating easier entry of FinTech start-ups in each jurisdiction and working towards quicker licence processing;
• Enhancing bilateral trade and investment flows;
• Encouraging engagement between Australian and UK Fintech sectors to boost collaboration opportunities.
As part of its Fintech policies, Australia has taken a number of regulatory actions towards cryptocurrencies. In September 2017, the Australian Securities and Investments Commission (ASIC) published ICO guidelines. The guidelines aimed to help ICO issuers consider their legal obligations when offering coins or tokens.
The Australian Taxation Office (ATO) has also provided guidance as to the tax treatment of cryptocurrencies. According to the guidance, transacting with cryptocurrencies is “akin to a barter arrangement, with similar tax consequences.” This is because, in the view of the ATO, such currencies are “neither money nor a foreign currency.” Individuals who engage in cryptocurrency transactions are advised to keep records of the date of transactions; the amount in Australian dollars (“which can be taken from a reputable online exchange”); what the transaction was for; and who the other party was (“even if it’s just their bitcoin address”). Capital gains taxes may apply whenever an individual disposes of their cryptocurrency.
In late September 2018, ASIC also published its Corporate Plan for 2018-2022. One of the action plans is to develop an “approach for applying the principles for regulating market infrastructure providers to crypto exchanges.”
Australian Securities and Investments Commission (ASIC)
In May 2018, ASIC released Information Sheet 225 (INFO 225) giving guidance about the potential application of the Corporations Act 2001 (Corporations Act) to entities that are considering raising funds through an initial coin offering (ICO) and to other crypto-currency or digital token (referred to as ‘crypto-asset’) businesses. On 30 May 2019, ASIC updated INFO 225 with new information on how the Corporations Act may apply to businesses that are considering raising funds through an ICO and to businesses involved with crypto-assets.