Australia is moving toward regulating cryptocurrencies like Bitcoin and Ethereum under new anti-money laundering legislation.
According to the Australian Broadcasting Corporation (ABC), Parliament will vote on the measure this week. If it passes, it will place Bitcoin and other cryptos under the auspices of Australia’s financial regulatory agency.
If the new laws are passed, the financial intelligence regulator AUSTRAC will be given new powers to police digital currency exchanges — where traders buy and sell Bitcoin, Ethereum and other cryptocurrencies. These exchanges like Independent Reserve and BTC Markets would need to be registered under the new regime. It will also become an offense for an “unregistered person” to provide digital currency exchange services.”
The proposed Australian law is part of a global movement to regulate cryptocurrencies. Last month, China prohibited trading cryptos on domestic exchanges and outlawed initial coin offerings. Chinese officials announced their regulatory crackdown on cryptos right after emerging markets fund manager Mark Mobius warned that governments around the world will begin clamping down on digital currencies because of their use in illicit financing, terrorism, and drug trafficking. He said increased regulation in the digital money world is going to mean a rush back to gold.
On queue, the Australian Criminal Intelligence Commission (ACIC) has pushed for tighter regulation of cryptocurrencies in order to fight organized crime, terrorism, and drugs. The commission released a report on organized crime in August warning that cryptos provide an easy way for criminals to transfer funds.
Virtual currencies, such as Bitcoin, are increasingly being used by serious and organized crime groups. They are a form of currency that can be sold anonymously online, without reliance on a central bank or financial institution to facilitate transactions.”
Australia’s proposed regulations don’t go nearly as far as China’s and appear tailored to rein in and mainstream the cryptocurrency market rather than crush it. Parliament recently passed another bill that removed double taxation from cryptocurrency transactions, a move supporters say will increase the use of Bitcoin in everyday exchanges.
Some analysts say the proposed regulations will ultimately boost Bitcoin and other cryptos in the Land Down Under. Independent Reserve’s director Lasanka Perera told ABC he thinks tighter regulation will help remove the criminal stigma from cryptocurrencies.
These new laws would be good for the industry, it will give more confidence to investors, consumers and businesses to enter the industry.”
But many in the crypto world say the new law will crush their businesses. They cite the cost of compliance and the possibility that they will have to confirm customer identity for small transactions. Daniel Alexiuc runs an online business called Living Room of Satoshi. Through his website, customers can pay household bills using Bitcoin and 10 other cryptocurrencies.
The proposed legislation will have the effect of requiring KYC [Know Your Customer] procedures of our customers for even very small transactions like paying your phone bill or buying a banh mi (Vietnamese bread roll) for lunch.”
Alexiuc said the proposed law would kill his payment system, calling it “completely unfeasible.”
Other opponents of the regulatory scheme said the high cost of compliance would create high barriers of entry into the cryptomarket.
The arguments for cracking down on cryptocurrencies mirror those used to justify the “war on cash” – fighting crime and protecting us from “terrorists.” Just last spring, the International Monetary Fund (IMF) published a creepy working paper offering governments suggestions on how to move toward a cashless society, even in the face of strong public opposition.
There are strong parallels between cash and cryptocurrency that make it seem likely governments will continue to ramp up efforts to crack down on digital currency as well.
Ultimately, it’s about control. By controlling access to your own money – whether cash or crypto – banks and governments increase their control over you. They can collect maximum taxes and fees, they can track purchases, and they can even shut down your ability to access your own money.
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