What does the future of cryptocurrency in Australia look like?

What does the future of crypto look like in Australia as it grows in popularity? (Source: Getty)

Stats show around one-in-six (17 per cent) Australians own cryptocurrency, and the figure is rising year-on-year as investments like Bitcoin and Ethereum grow in popularity.

But, with Bitcoin prices currently in an upswing, what does the future hold for cryptocurrency in Australia?

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Do Australians want to invest in crypto?

Research from YouGov found around 4 million Aussies are likely to purchase digital currencies in the next 12 months, which is largely being led by millennial and Gen Z investors.

Interestingly, of the 4 million Aussies who were keen to jump on the crypto bandwagon, around two-thirds of them believed crypto was a good alternative to an investment property.

And, given the barrier to entry to the housing market is so high at the moment, this checks out.

Will regulations around cryptocurrency tighten?

While investments are on the rise, regulators have been slow to implement guidelines for organisations and investors in the crypto industry to follow.

Currently, Australia’s anti-money laundering regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC), requires all crypto exchanges in the country to register with them.

Furthermore, the Australian Taxation Office (ATO) has said that crypto gains are subject to similar tax policies as shares, and need to be reported to the tax office. For example, crypto investors will be subject to capital gains tax. But, it’s still a nascent area of tax law, so Aussie investors aren’t always entirely clear on what their obligations are.

But that’s about it.

Cue the Select Committee on Australia as a Technology and Financial Centre.

Huh? What’s that?

The Select Committee on Australia as a Technology and Financial Centre, or the Senate inquiry into fintech for short, was launched in May this year to help the Government understand the size and scope of opportunity for Aussie customers and businesses to grow into a stronger tech and finance centre.

As part of this inquiry, the Committee launched into a review of the federal policy framework around crypto and blockchain technology in Australia in a bid to identify opportunities and risks in the sector.

The Commonwealth Bank of Australia told the Senate fintech inquiry that Australia needs a “domestic regulatory framework” for the digital asset sector, so the Committee will be looking at ways to introduce some guidelines for the industry.

However, founder of Finder.com.au, Fred Schebesta, said the Committee could also be looking at extending Australia’s fintech “sandbox” to include cryptocurrency.

In the business world, a “sandbox” is simply an environment that fosters collaboration and, according to Schebesta, provides “space for businesses to test new ideas with lower compliance costs while also giving regulators strong oversight on new projects pushing the boundaries of what is possible.”

How will crypto fit with Australian banking?

Right now, tensions are high between the big banks and fintech companies that work within the crypto space.

The issue, called ‘de-banking’, is where banks restrict banking services to businesses engaging in delivering services related to cryptocurrency, according to Schebesta.

And fintechs are getting pretty fed up. Overseas transfer startup Wise told the Senate inquiry that it had to use international banks operating in Australia instead of a local partner, because Aussie banks were difficult to deal with.

“The crypto hesitancy of the Australian banks has meant that start-up fintechs have arisen to fill the void and satisfy the consumer demand for crypto investment,” neobank Revolut added.

“While that may be good in the long term for competition and innovation, new start-ups may not have the resources to invest in robust risk and compliance controls.”

Experts are hoping the inquiry will lead to a resolution that works for both established banks and newer fintechs.

So what needs to happen going forward?

Teamwork makes the dream work.

Clearly, Aussies are interested in investing in crypto. Now, it’s just up to the government to begin facilitating that.

Blockchain Australia, the industry body that advocates for the adoption of blockchain tech across the industry and government sectors, said the only way forward is through collaboration.

"Education is lacking, considered and consistent industry consultation has been largely absent notwithstanding recent efforts on the part of regulators to redress these shortcomings," it said.

"Blockchain Australia's view is that a genuinely collaborative approach between the government, public sector and private sector, facilitated by legal and technology experts in the field, will be paramount to ensuring that Australia can find its way through to a more practical and appropriate framework.”

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