There has been a lot of talk around the movement of cryptocurrency prices over the last six weeks. From a high of $795 billion in early 2018, the market’s overall valuation declined to a low of $340 billion. As a result, many commentators moved to theorize reasons for the decline. Suggested explanations included impending inter-country regulation, overweighted market exuberance and signs of a bursting bubble. But since this cacophony of speculation, the market has begun to stabilize and has most recently started showing signs of a rally.
For Australian investors, local activity shows confidence in the future of cryptocurrencies. Despite macro speculation around the deleterious implications of the recent correction, Australia’s government has passed new legislation that demonstrates a commitment to taking the necessary steps to legitimize cryptocurrencies as an asset class.
Specifically, the Australian Transaction and Analysis Centre (AUSTRAC) recently updated its Anti-Money Laundering laws to require greater transparency and recording of cryptocurrencies. Through the implementation of a new Digital Currency Exchange registry, exchanges dealing with digital currencies will be required to disclose specific details of all transactions made on its platforms.
This increased monitoring indicates that the growth of cryptocurrencies has outpaced the relevance of legacy regulation. In response, the government appears to be making a concerted effort to update its understanding in anticipation of broader public adoption.
An excerpt from the new ruling details how AUSTRAC aims to achieve this by requiring cryptocurrency exchanges to be more diligent and transparent with how they record transactions.
“The Chapter covers registration on the Digital Currency Register, the renewal of registration, suspension of registration, cancellation of registration, review of reviewable decisions, updating and correcting of information, the correction of entries on the register and the publication of information… Amendments have been made to … transaction reporting of digital currency exchange transactions (to include additional reporting identifiers specifically relevant to digital currency exchange providers).”
Important to note from this legislation is that the Australian government is not regulating against cryptocurrencies. Instead, the policy amendment is addressing the need to mitigate nefarious and unscrupulous activity that may arise as the asset class continues to popularize.
It’s a position that suggests acceptance rather than uncertainty.
The Parliament of Australia furthers this sentiment releasing the following:
“Anti-Money Laundering and Counter-Terrorism Financing Act 2006 [will] expand the scope of the Act to include regulation of digital currency exchange providers.”
Rather than outlawing the nascent asset class altogether, the government has moved to encourage guidelines for appropriate activity in line with its gradual evolution. Digital currency anonymity has been considered a point of hesitancy for macro speculation thus far, however, the government hopes to allay these concerns by classifying cryptocurrencies under new legislation.
By amending its Anti Money Laundering and Anti-Terrorism bill to incorporate the nuances of cryptocurrencies, the Australian government is taking a stance of regulatory fluidity, not resistance.
Tellingly, these decisions come in the wake of potential regulation driving a downward trend in the crypto market overall. Lighter regulation may potentially signal more stern positions from governments, as the market’s current volatility poses risks to inexperienced investors.
However, by investing resources in research and new legislation, Australia’s government shows its commitment to the perceived longevity of cryptocurrencies as it tries to answer these questions.
In a similarly proactive initiative, the Australian Taxation Office (ATO) is also exploring how it can best incorporate treatments of digital currencies in its own regulatory jurisdictions.
An ATO spokesperson recently announced the governing body’s desire to stay ahead of the curve in understanding how Australia can best classify cryptocurrencies and how they are taking the necessary measures to better inform upcoming policies.
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Australia’s government has passed new legislation signaling a confidence in the longevity of cryptocurrencies as an asset class. (Image Credit / Shutterstock)
There has been a lot of talk around the movement of cryptocurrency prices over the last six weeks. From a high of $795 billion in early 2018, the market’s overall valuation declined to a low of $340 billion. As a result, many commentators moved to theorize reasons for the decline. Suggested explanations included impending inter-country regulation, overweighted market exuberance and signs of a bursting bubble. But since this cacophony of speculation, the market has begun to stabilize and has most recently started showing signs of a rally.
For Australian investors, local activity shows confidence in the future of cryptocurrencies. Despite macro speculation around the deleterious implications of the recent correction, Australia’s government has passed new legislation that demonstrates a commitment to taking the necessary steps to legitimize cryptocurrencies as an asset class.
Specifically, the Australian Transaction and Analysis Centre (AUSTRAC) recently updated its Anti-Money Laundering laws to require greater transparency and recording of cryptocurrencies. Through the implementation of a new Digital Currency Exchange registry, exchanges dealing with digital currencies will be required to disclose specific details of all transactions made on its platforms.
This increased monitoring indicates that the growth of cryptocurrencies has outpaced the relevance of legacy regulation. In response, the government appears to be making a concerted effort to update its understanding in anticipation of broader public adoption.
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An excerpt from the new ruling details how AUSTRAC aims to achieve this by requiring cryptocurrency exchanges to be more diligent and transparent with how they record transactions.
“The Chapter covers registration on the Digital Currency Register, the renewal of registration, suspension of registration, cancellation of registration, review of reviewable decisions, updating and correcting of information, the correction of entries on the register and the publication of information… Amendments have been made to … transaction reporting of digital currency exchange transactions (to include additional reporting identifiers specifically relevant to digital currency exchange providers).”
Important to note from this legislation is that the Australian government is not regulating against cryptocurrencies. Instead, the policy amendment is addressing the need to mitigate nefarious and unscrupulous activity that may arise as the asset class continues to popularize.
It’s a position that suggests acceptance rather than uncertainty.
The Parliament of Australia furthers this sentiment releasing the following:
“Anti-Money Laundering and Counter-Terrorism Financing Act 2006 [will] expand the scope of the Act to include regulation of digital currency exchange providers.”
Rather than outlawing the nascent asset class altogether, the government has moved to encourage guidelines for appropriate activity in line with its gradual evolution. Digital currency anonymity has been considered a point of hesitancy for macro speculation thus far, however, the government hopes to allay these concerns by classifying cryptocurrencies under new legislation.
By amending its Anti Money Laundering and Anti-Terrorism bill to incorporate the nuances of cryptocurrencies, the Australian government is taking a stance of regulatory fluidity, not resistance.
Tellingly, these decisions come in the wake of potential regulation driving a downward trend in the crypto market overall. Lighter regulation may potentially signal more stern positions from governments, as the market’s current volatility poses risks to inexperienced investors.
However, by investing resources in research and new legislation, Australia’s government shows its commitment to the perceived longevity of cryptocurrencies as it tries to answer these questions.
In a similarly proactive initiative, the Australian Taxation Office (ATO) is also exploring how it can best incorporate treatments of digital currencies in its own regulatory jurisdictions.
An ATO spokesperson recently announced the governing body’s desire to stay ahead of the curve in understanding how Australia can best classify cryptocurrencies and how they are taking the necessary measures to better inform upcoming policies.
“The creation, trade and use of cryptocurrencies is a rapidly evolving area. The ATO is continuing to work proactively both domestically and internationally to identify and respond to any issues related to the tax implications of cryptocurrencies, whether as a result of new types of transactions, new structures or new participants entering the increasing digitized environment,”
In combination, the moves of AUSTRAC and the ATO work to debunk a misunderstanding spotlighted in the market’s recent correction.
Much speculation has formed about the implications of government intervention potentially branding cryptocurrencies as illegitimate. However, on the contrary, such formal regulation seems to be imbuing the asset class with credibility. As Australia’s precedent shows, legislation of digital currencies serves to legitimize the role of the asset class.
The government has a responsibility to protect its members and thus by amending legislation to include cryptocurrencies, rather than prohibiting them, it signals a belief of a future for the asset class beyond the market’s current exuberance.
With countries such as Canada, Japan and Singapore also beginning to implement similar regulation, this sentiment appears to be gathering momentum. Greater regulation works to allay anxieties of un-contained manipulation and despite speculation of the industry’s bubbly characteristics, these government initiatives are positioning cryptocurrencies with greater authority.
Further legislation appears likely as the industry continues to develop, however the cynicism that many believe it connotes appears increasingly misplaced.
If the recent rally is any indication, there appears a burgeoning confidence of a future for cryptocurrencies behind the noise of fear, uncertainty and doubt.
Read more at:
https://www.forbes.com/sites/nguyenjames/2018/02/20/new-australian-regulation-suggests-that-cryptocurrencies-are-not-a-bubble/#3f125dd46661
