Australian Cryptocurrency Regulation: A Comprehensive Guide

Australia has been actively engaged in developing a regulatory framework for the cryptocurrency industry. Australia recognized the potential of cryptocurrencies early on, acknowledging them as a legitimate form of currency and financial asset. In 2017, the Australian government enacted legislation that brought digital currency exchanges under the purview of the Australian Transaction Reports and Analysis Centre (AUSTRAC), the country's financial intelligence agency. Thus the AUSTRAC amended the AML legislation and introduced a new type of license Digital Currency Exchange (DCE) license.

The Australian Transaction Reports and Analysis Center (AUSTRAC) regulates digital currency exchanges

Key Numbers about Cryptolicense in Australia

no

minimum share capital

30%

corporate income tax (CIT) rate

6 weeks

average time of starting new project

0%

WHT rate for fully franked dividents

3 years

license renewal period

10%

goods and services tax (GST) rate

Legal Opinion about Cryptolicense in Australia

Ganna Voievodina

Manimama, CEO

"As cryptolawyer, I know the value of expanding your reach. A DCE license in Australia opens doors to new clients and exciting opportunities. Invest in your future and elevate your business".

Types of Activities with a License

Exchange crypto to crypto: DCEs are authorized to facilitate the exchange of various virtual assets, including utility tokens and coins, ensuring diversified trading options.

Exchange crypto to fiat and fiat to crypto: DCEs enable the conversion between cryptocurrency and fiat currencies, offering customers the flexibility to transact in multiple currencies.

Choose the Package of Services

Advanced

Standart set up of company infrastructure for the start of operational activity

€15,000

  • Legal support within the process of obtaining the DCE license
  • Company formation in Australia
  • Company name of your choice
  • Individual business plan with 3 scenario
  • Individual AML/KYC Policy
  • Registration of the activities within AUSTRAC
  • Corporate documents
  • Handling the communication with AUSTRAC
  • Local Anti-Money Laundering officer
  • Local virtual office for one year
  • Order now

    Basic

    VASP authorization under the minimum regulatory requirements

    €10,000

  • Legal support within the process of obtaining the DCE license
  • Individual business plan with 3 scenario
  • Standard AML/KYC Policy
  • Registration of the activities within AUSTRAC
  • Order now

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    Step by Step Description

    Step 1. Company incorporation

  • Determine business structure (e.g., Pty Ltd, partnership, sole trader)
  • Choose a business name
  • Obtaining an Australian Business Number (ABN) from the Australian Business Register (ABR) because it is essential for tax and other business dealings
  • Register for Goods and Services Tax (GST), if applicable
  • Prepare company constitution
  • Appoint at least one director and, if required, a company secretary and ensure directors are at least 18 years old and have consented to their appointment
  • Decide on the share structure and issue shares to initial shareholders
  • Register the company
  • Receive Certificate of Incorporation
  • Duration: up to 8 weeks (including potential delays)

    Step 2. Obtaining the license

  • Develop and implement an AML/CTF program compliant with AUSTRAC regulations, appoint a compliance officer
    • Submit Digital Currency Exchange (DCE) Registration form with AUSTRAC and supporting documentation (such as business plans, risk assessments, and compliance manuals)
    • AUSTRAC will assess an application, conducting due diligence on business
    • Upon successful assessment, AUSTRAC will approve an application and the company be officially registered as a DCE in Australia
    • Duration: up to 3 months

    Understanding Requirements in Australia

    A DCE license is required for cryptocurrency exchanges

    Australia introduced a licensing regime for digital currency exchanges. Obtaining a DCE License is mandatory for businesses engaging in cryptocurrency exchange activities. This ensures adherence to regulatory standards and customer protection.

    Requirements for DCE registration

    It is necessary to have an ACN or ABN to obtain a DCE license

    Following information is required for obtaining DCE License:

    • the services that business provides
    • the structure of business
    • contact details for business
    • the names and contact details of key personnel in business, such as directors and officeholders
    • an official police document for each of the key personnel in business (acceptable documents - National Police Certificate, foreign equivalent of a National Police Certificate, National Police History Check)
    • financial statements for the most recent financial year
    • registration numbers such as an ABN or an Australian Company Number (ACN)
    • registration details if business is registered in a foreign country
    • any criminal, civil or enforcement action relating to business and key personnel

    Taxes in Australia

    Australia does not have a VAT system

    The Australian Taxation Office (ATO) provided guidelines on how cryptocurrencies are taxed. Cryptocurrencies are generally treated as property for tax purposes. Capital gains tax (CGT) may apply to the disposal of cryptocurrencies and individuals are required to report such transactions in their tax returns. The CGT rate in Australia is generally equal to the individual's marginal income tax rate, and it applies to the capital gain made on the disposal of assets.

    The income tax rates for individuals vary based on income levels, with the rates ranging from 0% to the top marginal rate of 45%:

    Tax rates 2023–2024

    Taxable income - tax rate

    1) 0 – $18,200 – 0%

    2) $18,201 – $45,000 - 19% for each $1 over $18,200

    3) $45,001 – $120,000 - $5,092 plus 32.5% for each $1 over $45,000

    4) $120,001 – $180,000 - $29,467 plus 37% for each $1 over $120,000

    5) $180,001 and over - $51,667 plus 45% for each $1 over $180,000

    Every corporation is liable to a federal tax rate of 30% on their taxable income, except for businesses categorized as 'small or medium' enterprises. These entities enjoy a discounted tax rate of 25%. However, this reduced tax rate is applicable solely to companies that, in conjunction with specific 'connected' entities, remain below the combined turnover limit of AUD 50 million.

    Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.

    Additionally, Australia does not have a Value Added Tax (VAT) system. Instead, it uses the GST system, which is similar to VAT systems in other countries.

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