Australia & Crypto
Australia Crypto Friendly Score
Cryptocurrencies, crypto assets and blockchain ledger technology are creating waves in almost every sector worldwide. These innovations have forced us to rethink how our current financial system works and are reshaping financial markets today. Cryptocurrencies present us with a decentralized model of finance, where individuals are not dependent on any intermediaries like banks.
The cryptocurrency industry took less than 24 months to reach the market capitalization of $3 trillion during 2020-2021. That’s almost 1,500% growth from the industry’s $200 billion market capitalization at the start of 2020.
During this time, the newly emerged fintech industry and investment sector gained massive institutional and retail investors’ attention. Due to its widespread popularity, governments around the world are forced to formulate a proper regulatory framework for cryptocurrencies. Meanwhile, it’s also interesting to see how different corporations and big banks are looking at this technology.
Despite its growing popularity and adoption, cryptocurrency is still a novel industry. Most people are unaware of things like crypto asset regulation, acceptance, scope, etc. In this article, we will dive deep into the cryptocurrency landscape and discuss everything Australian investors need to know about it to be able to buy, sell, or invest in such tokens.
Crypto Adoption Among Institutions in Australia (5)
Though the crypto sector is populated by retail investors, and the number is increasing every year, the area that matters the most is one represented by institutional investors. These types of investors not only bring several hundred million dollars to the industry but also make it easier for future private investors to develop trust in this newly emerging investment sector.
However, institutional adoption is harder to achieve than it may sound. Companies and businesses have to go through a painstaking and strict regulatory process to be eligible. These institutions are always under tight scrutiny and regulations by Australian financial regulators. On top of that, due to the absence of a clear and properly-planned regulatory framework, most corporate businesses tend not to risk stepping into the space, also infamously known as the “Wild West.”
As a result, Australia being one of the most prepared countries for Bitcoin and with 16% of the population invested in the digital assets market, still has not seen a significant crypto asset institutional adoption on a large scale.
Though there are several small businesses and startups throughout the country benefitting from blockchain ledger technology and accepting digital asset tokens as a payment method, we still cannot find any noteworthy company stepping into the cryptocurrency industry.
With a more encouraging attitude from the government towards digital assets and the formulation of a much-required regulatory and licensing framework by Australian financial regulators, we will start seeing a number of institutions jumping into cryptocurrencies.
Crypto Exchanges and Wallet Availability (10)
When it comes to the approaches available to buy, sell, trade, and store your crypto assets in Australia, options are numerous. You can find several high-profile crypto exchanges and wallets already operating in the country.
The most popular method used to purchase cryptocurrency is centralized crypto exchanges, as they are compatible with local banks and offer a straightforward procedure for investment. These are owned and controlled by a centralized entity. Following are some of the top digital currency exchanges in the country:
eToro is one of the oldest working crypto exchanges in Australia registered by ASIC-registered. The platform allows you to purchase crypto assets using multiple payment methods, such as bank transfers, e-wallets, debit/credit cards, etc. The platform is well-suited for beginners as you can follow and learn from the top-rated traders through their website. Apart from dozen of crypto pairs, you can also invest in stocks, ETFs, and commodities.
Crypto.com is known for its user-friendly trading experience, which is great for newcomers in the industry. The exchange allows its users to trade up to 250 different crypto options with a minimal 0.4% trading fee. Moreover, if you hold the company’s official crypto token, CRO, in your wallet, you get a 10% discount on all your trades. However, the site displeases some users with its staggering 4% fees on deposits via debit card.
Launched in 2012, Coinbase is one of the most regulated crypto exchanges out there, hence, it represents the best option when it comes to reliability. Coinbase is a publicly-traded company, with its shares listed on the NASDAQ. The exchange allows you to trade up to 50 different cryptocurrencies. However, the platform faces criticism for its comparatively high trading and deposit fees.
The next crypto exchange on this list is Binance. Launched only in 2017, the exchange has already managed to become the world’s largest crypto platform with respect to trading volume. It supports a massive range of crypto and fiat options. On top of that, the company also launched an NFT trading platform some months ago. It is one of the cheapest crypto trading platforms today, and you can further reduce fees by holding the platform’s native token, BNB.
Swyftx is another great option for cryptocurrency holders in the country. It is great for more experienced traders who may need advanced trading tools, such as price alerts, limit orders, advanced stops, and more. On top of that, the exchange also integrates live crypto charts by TradingView – which is one of the best price tracking and live charts websites.
Apart from the centralized crypto exchanges and trading platforms, Australian citizens can also use decentralized exchanges to buy and sell digital currencies. These exchanges are built on blockchain networks and enable people to trade far more digital assets than any centralized cryptocurrency trading site. On top of that, they generally charge a much cheaper trading fee. However, these exchanges are not suitable for beginners due to their complex trading procedures.
Crypto wallets are used to store digital currencies securely for long terms. These are perfect for those who want to hold their assets for long periods of time. As far as the availability of crypto wallets in Australia is concerned, not only are there multiple types of wallets available but a number of companies to choose from as well.
The most common crypto wallets used are soft wallets and cold wallets. Soft wallets are available as desktop software, cellphone application, and browser extension. These wallets are mostly free to use and easier to use when it comes to trading. However, they are not completely safe, as they are always connected to the internet, so they are at risk of getting breached.
The other type, cold wallets, refers to physical devices used for storing crypto assets and other digital coins. These wallets are considered the safest option, as they are not connected to the internet. However, these wallets can be tricky while trading digital currency.
The most commonly-used cryptocurrency wallets in Australia include Ledger Nano S Plus, Ledger Nano X, Exodus, Atomic Wallet, Trezor Model T, MetaMask, Trust Wallet, and Coinomi.
Government Regulations for Crypto in Australia (6)
In Australia, the treatment of crypto assets varies across different jurisdictions and financial regulators. While some states have chosen not to impose any regulations, others have taken stricter measures to prevent their use for unlawful activities or ventures.
The Australian Securities and Investments Commission (ASIC) is responsible for regulating companies and financial planners, as well as protecting consumers from financial scams and fraud. Similarly, the Australian Taxation Office (ATO) is responsible for the administration of taxes, such as capital gains tax, in Australia. The privacy of individuals and organizations is protected by the Office of the Privacy Commissioner (OPC) by regulating the collection and use of personal information.
Australian crypto traders have been subject to a Goods and Services Tax (GST) since July 1, 2018. The GST is a tax that applies to all goods and services offered in Australia, regardless of their origin. Depending on the amount of money earned from trading cryptocurrencies, GST may be applicable in certain situations.
The Australian Tax Office has provided a table that can help determine whether GST must be paid on crypto transactions. This means that Australian crypto traders selling their coins will be required to pay GST on the transaction amount. Furthermore, since GST is a consumption tax, the buyer will also be required to pay GST on the amount he paid for the coins. Crypto traders are also required to keep track of the date of purchase, cost of purchase, date of sale, and amount of profit or loss from their trades.
ICOs have been used to raise billions of dollars by startups and companies. To prevent fraud, many countries have imposed regulations on ICOs. In Australia, ICOs are subject to regulations depending on their type.
If the ICO is considered a security, then it will be regulated by the Australian Securities and Investment Commission. The same regulation applies to any ICO that offers shares or interest in a company. If the ICO is not considered a security, the ATO will impose taxes on the tokens generated and their value at the time of the sale. The ATO will also treat the tokens as general income for the business owner.
Simply put, there are strict regulations on the use of cryptocurrencies in Australia. There are no concrete plans to further regulate the industry and Australian Consumer Law is not applied for digital assets (yet). Due to their decentralized nature, regulating cryptocurrencies is a difficult task. Many government officials have expressed the need for more research on the subject before making any decisions on regulation. In the meantime, Australian cryptocurrency traders can expect to continue facing strict regulations on taxes, privacy, and the sharing of coins.
Cryptocurrency Financial Services in Australia (5)
Australia is a leading market for FinTech startups, but the country is still a work-in-progress when it comes to the adoption of digital financial services. While the benefits of digital finance are clear, there are several obstacles preventing Australian consumers from adopting digital financial services.
The main challenge facing the adoption of digital finance is a lack of trust. Consumers don’t trust the technology, and this is resulting in low levels of digital adoption. This is evident in the low rates of digital banking adoption in Australia. Another challenge to digital adoption is a lack of knowledge surrounding digital financial services. Consumers don’t understand how to use these products or even what services are available to them yet.
While cryptocurrency and blockchain technology has the potential to disrupt the financial sector as we know it, it doesn’t look like they could replace mainstream financial services any time soon. As mentioned above, cryptocurrency is decentralized, anonymous, and can be used by anyone in the world. However, mainstream financial services rely on a centralized database, operate within the laws of a particular country, and can only be accessed by users who have valid accounts.
Digital finance and cryptocurrencies, such as Bitcoin, have the potential to revolutionize the financial sector as we know it. Not only does Bitcoin provide a decentralized and secure way to make and receive payments, but it can also serve as a new asset class. While the adoption of cryptocurrencies is on the rise, the financial sector as a whole is set to change rapidly in the next few years. The rise of FinTech startups and the adoption of digital financial services are contributing to a new wave of financial innovation that’s likely to transform the way consumers make and manage their money.
Cryptocurrency Transparency (5)
Transparency is crucial in any financial relationship; it ensures that everyone is on the same page and that expectations and obligations are clearly defined and understood by all parties involved. In the context of cryptocurrency, transparency is even more important given the nature of the investment and the fact that parties involved may be scattered across the world.
It is important to have a clear understanding of the services offered by the company, the risks involved, and the terms attached to any investment. It is also important to know who is behind the company, as well as what their reputation and experiences are.
When one invests in conventional financial markets and traditional asset classes, the government is obliged to protect consumers through the Australian consumer law. If the company ends up defrauding you, you can report them to the authorities and have them shut down. However, when it comes to cryptocurrency, there is very little consumer protection available. Because of the anonymous nature of blockchain technology, it is extremely difficult to trace the identity of criminals and shut them down. This lack of consumer protection is one of the biggest risks associated with investing in cryptocurrency.
When the market is unregulated, and fraud is rampant, investors are at a much higher risk of losing their money. Keep in mind that the lack of consumer protection applies to both the investor and the company. This means that if the company ends up defrauding you, you don’t have many options.
There is no doubt that digital currency technology has a great deal of potential. There are many companies out there that are revolutionizing the way we conduct financial transactions. However, a big part of the risk in cryptocurrency investments comes from the lack of consumer awareness of the risks and rewards involved. We often see stories of people who have invested a small amount of money and become millionaires after the price of Bitcoin skyrocketed in 2017 and 2021.
However, this is not the norm and should not be expected. Investing in cryptocurrency is highly risky, and there is a high probability that you will lose money. Before investing in cryptocurrency, make sure you are fully aware of the risks involved and that the rewards outweigh your investment. You should also be clear about what you are investing in and whether or not it is legitimate.
How to Spend Crypto in Australia? (9)
Though blockchain and cryptocurrencies are starting to get mainstream attention worldwide, and more institutions are paying attention to this technology than ever before, we are still in a pretty early stage. Digital asset tokens have very minimal use cases out of the DeFi industry in most regions of the world.
However, Australia is among the top countries where opportunities to spend digital assets in the real world are improving every day. Several businesses and startups are starting to accept digital currency as a legitimate way to pay for their services. Following are some of the top ways you can spend your digital asset coins in Australia.
- A number of e-commerce businesses and online retailers, such as BitShopping, now allow you to purchase goods using cryptocurrencies. Through this online store, you can buy furniture, tech items, clothing, pet toys, home appliances, tools, and more using crypto asset tokens, including BTC, ETH, LTC, BCH, DASH, etc.
- Queensland Solar & Lightening provides the service of installing solar energy systems in Brisbane, Queensland. The business allows you to get a renewable energy generating setup using cryptocurrency. The company has started accepting cryptocurrency and Bitcoin payments for its service.
- Well, if you ever wanted to grab a coffee or have dinner at a nice place and pay the bill using your crypto assets, now you can. A number of cafes and restaurants in Australia now accept payments in cryptocurrencies. These include Third Wave Cafe, Green Peppercorn, and The Kodiak Club.
- Surprisingly, one of the largest booking agencies, CheapAir, has been accepting cryptocurrency payments since 2014. The company has partnered up with BitPay to accept Bitcoin transactions. However, so far, the company only accepts Bitcoin, but we expect other cryptocurrencies to get accepted soon.
- Microsoft was probably one of the earliest companies to accept cryptocurrencies for online transactions back in 2014. Anyone in Australia can make online purchases on Microsoft Xbox Live using Bitcoin. However, first, you will need to fund your account with cryptocurrency tokens.
- eGifter is a well-known online company that allows you to purchase gift cards using cryptocurrencies. You can use the platform to buy gift cards for a number of popular online retail stores. Currently, the site accepts Bitcoin, Ethereum, and Litecoin. On top of that, you can also use your Visa debit or credit card.
- Dream PC is an Australia-based online store where you can buy pre-built and custom-built high-power PCs using cryptocurrency. They provide services only in southern Australia and are one of the largest PC exporters in the country.
- Bitcoin ATMs mainly allow you to purchase Bitcoin and other cryptocurrencies using your debit or credit card. However, there are some bi-directional Bitcoin ATMs that offer the services of converting your digital assets into physical currency, as well. These machines make buying and selling cryptocurrency extremely easy and quick for a common person.
Australia is one of the few countries with the highest number of Bitcoin ATMs. Melbourne has about 27 Bitcoin ATMs, while Sydney has 21, and Brisbane 18. Apart from these three cities, there are 19 more Bitcoin ATMs all over the country.
Australian Banks in the Cryptocurrency Industry (7)
In recent years, the digital asset sector has been getting attention from big banks. Most banks view cryptocurrencies as an investment opportunity, particularly in custody and trading services. In custody services, for example, banks could store and manage investors’ digital assets, as well as issue them with securities against those assets.
Banks such as Westpac and ANZ have already received regulatory approval to launch their own digital currencies. However, these are not cryptocurrencies as you would typically understand them. These are ‘Central Bank Digital Currency’ (CBDCs) backed by the Australian or New Zealand central banks. Some banks have also experimented with the use of blockchain technology to create new services, such as CommBank’s blockchain-powered proof of concept for tracking the ownership of assets.
Westpac has joined hands with Alpha-XX – a blockchain-powered cash management platform – to trial a new cross-border payments system. The aim is to allow businesses to track their cash flow more effectively by using a distributed ledger to record and authenticate transactions. This will be particularly useful for businesses that regularly carry out international transactions, as it will make the process more transparent and efficient. The bank plans to expand the service to other currencies in the future.
ANZ has partnered with the Australian stock exchange to launch a digital coin called ‘D Coin.’ The token isn’t a cryptocurrency in the true sense, as it will be backed by the assets of the stock exchange and will be used as a digital representation of shares. However, it will help them understand the regulatory landscape for digital currency assets. The bank has also partnered with IBM to conduct experiments with the use of blockchain to manage trade finance assets and improve supply chain efficiency.
Though the technology has been around for over a decade, the cryptocurrency industry is still in its early stages. Governments and banks have just started to realize the potential of this innovation. The Reserve Bank of Australia (RBA) is not any different here. Since cryptocurrencies provide an entirely novel decentralized financial model, it will take some time till the government is done formulating legislation for it. However, it is only when this technology is properly regulated will we see its potential and what it is truly capable of.
Meanwhile, cryptocurrencies and digital assets continue to be considered a high-risk asset class and you should always do your own research as well as seek professional advice before investing in any crypto project. The market is entirely based on speculation, and the prices fluctuate a lot. It is recommended not to make any investment decisions without consulting a professional financial advisor first.
Skrumble.com provides all its content for informational purposes only, and this should not be taken as financial advice to buy, trade or sell cryptocurrency or use any specific exchange. Please do not use this website as investment advice, financial advice or legal advice, and each individual’s needs may vary from that of the author. This post includes affiliate links with our partners who may compensate us.