Buying and selling digital currencies is still unregulated in Australia because “e-currencies” are defined “an internet-based, electronic means of exchange” backed by something physical like a “precious metal” (gold or silver), or “bullion”, in the Anti-Money Laundering and Counter-Terrorism Financing Act. This definition does not cover digital currencies such as Bitcoin because they are backed by a cryptographic algorithm and not “something physical”.
However, Australia’s Parliament should close this loophole by voting in the coming days on new anti-money laundering regulations. As a result, digital currency exchanges would have to register with AUSTRAC, identify their customers and report any suspicious transaction. As part of the new bill, AUSTRAC would be granted more power to monitor these exchanges.
A couple of months ago, Justice Minister Michael Keenan said “Businesses that trade digital currencies for money, and vice versa, will be required to enrol and register with AUSTRAC”, and that these businesses would need to “establish, implement and maintain an AML/CTF (anti-money laundering and counter-terrorism financing) program”.
“Unregistered person” will no longer be allowed to provide digital currency exchange services. Also, exchanges will have to “report threshold transactions and suspicious matters to AUSTRAC, and keep appropriate records”.
Lasanka Perera, the Independent Reserve’s director, commented that “these new laws would be good for the industry, it will give more confidence to investors, consumers and businesses to enter the industry,” he said.
There is a growing impetus from various countries to regulate digital currencies. ACIC, the Australian Criminal Intelligence Commission, reported in August that “Virtual currencies, such as Bitcoin, are increasingly being used by serious and organised 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.”