Cryptocurrencies in Australia

Summary

Regulating cryptocurrencies is a challenge for policymakers around the world. This project examines the challenge faced by Australian policy-makers in designing an appropriate regulatory framework for cryptocurrencies that can detect money laundering, prevent revenue leakage and protect unsuspecting consumers from scams.

Researchers

Project background and aims

A part of the difficulty of designing an appropriate regulatory framework to regulate cryptocurrency in Australia requires regulators to understand what cryptocurrencies actually entail. To date, there is no clear and authoritative definition of a cryptocurrency. Cryptocurrency have no physical form. They are entirely digital. Their very existence lies in the data strings that represent each ‘coin’.

Cryptocurrency exist in a decentralised system without an intermediary party such as a bank. Instead each cryptocurrency transaction is contained in its own network. Each time a person interacts with a cryptocurrency, their computer joins that network to record the transaction. Computers in the network are constantly updating the information and sealing of the recorded parts of the digital ledger by encrypting the record using complex mathematical algorithm.

The unique nature of cryptocurrency makes it difficult for regulators to determine which aspects (if any) require regulation and, if so, how to control and monitor activities to protect consumers and prevent tax evasion and money laundering. This project will critically analyse the regulatory framework used to regulate cryptocurrency in Australia. The objective is to draw out weaknesses in the existing regulatory framework and to recommend reform options.

Methodology

This project will apply doctrinal legal and research methods to provide a comprehensive analysis of legislation and case law governing cryptocurrency under Australian taxation, financial services and consumer protection law. The research will extend to practices in regulating cryptocurrency adopted in other developed and developing countries including the United States and United Kingdom.

Output

  • Cassidy, J., Cheng, M. H. A., Le, T., A Toss of A (Bit)Coin: The Uncertain Nature of the Legal Status of Cryptocurrencies, Proceedings of Asia Conference on Business and Economic Studies (ACBES) by University of Economics Ho Chi Minh City on 8th – 9th Sep 2018 at Ho Chi Minh City, Vietnam.