Over the past few weeks, we have several countries taking an interesting stance on Bitcoin and other digital currencies. The Australian Senate’s Economic References Committee has greenlit an inquiry into such digital currencies.
It will take a while to gather all of the evidence to make a case, but we should find out more in the first sitting day, which will take place during March of 2015. The timing for this inquiry is rather interesting though, as it comes on the heels of the long awaited guidelines for cryptocurrency earnings and taxations.
We have received confirmation Bitcoin, and other digital currencies representing a similar model and structure, will be viewed in the same way as non-currency assets. As a result, non-commercial trades will not enforce taxation as long as they respect the AUS$10,000 treshold. As you would come to expect, several taxation lobby groups are not too pleased with this ruling, and feel digital currency should be treated the same way as physical currencies.
The main objective of this inquiry into digital currencies and Bitcoin is evaluating Australia’s options on regulation. Whether or not the ATO’s ruling presents the most appropriate approach is one the decisions to be made. On the other hand,building a system of regulation which can balance the growth in the digital currency industry against stability of the financial services sector and the Australian economy will prove to be a hard nut to crack.
One of the main concerns about digital currency is the anonymity of people using it, and how this could tie in with criminal activity. As things stand right now, Australia’s criminal finance advisors at AusTrac are not too concerned by the possible threat of digital currencies.
There is a very peculiar part about this enquiry which will interest a lot of digital currency enthusiasts. The Australian Senate Committee wants to pay particular attention to the potential disruption of digital currencies compared to the current financial and economical model. More specifically, how digital currency could affect the retail and banking sectors.
“I am pleased the inquiry announced today will look at tax treatment issues, which I hope will lead to a correction of the current interpretation of Bitcoin as taxable supply. It is important that government regulation encourages innovation, entrepreneurship and growth in this sector, which will help create more jobs and make Australia a leader in the [financial technology] space.”
– Ronald Tucker, Chairman of the Australian Digital Currency Commerce Association(ADCCA)
The ADCCA would like nothing more than to see the digital currency regulation being handed over to AusTrac. Whether or not this will effectively happen remains to be seen.