Australia inches closer to cryptocurrency regulation


Crypto is now moving yet another step closer to being controlled in Australia, with Parliament expected to this week vote on a bill to enhance the nation's anti money laundering laws.

The importance of the debatable cryptocurrency's hit its all time high on October twenty one, with marketcap leadin currency Bitcoin trading at $7,467 (or $US6,149).

That has been practically a ten fold surge from last October, when each product was worth just $803 (or maybe $US630). But even at that lower price tag, lots of folks thought the digital currency was over valued.

The proposed laws
In case the brand new laws are actually passed, the economic intelligence regulator AUSTRAC will receive new powers to police digital currency exchanges - where traders purchase and sell other, Ethereum, and Bitcoin cryptocurrencies.

These exchanges like Independent BTC and Reserve Markets will have to be registered within the brand new regime.

It'll additionally turn into an offence for an "unregistered person" to offer digital currency exchange services.

"Businesses that trade digital currencies for vice, and money versa, will be expected to enrol and register with AUSTRAC," 

Justice Minister Michael Keenan said in a Parliamentary speech regarding the bill in August.

Mr Keenan said these firms will have to "establish, implement and maintain an AML/CTF (anti-money laundering and counter-terrorism financing) program".

Additionally, they will need to report distrustful matters and threshold transactions to AUSTRAC, and keep proper records.

This is a much softer stance in comparison to that of China, which recently banned original coin offerings (ICOs) last month - a move which led to Bitcoin's value dropping by much more than US$1,000 to $US3,226 (on September fourteen).

Digital currencies and crime

The Australian Criminal Intelligence Commission (ACIC) continues to be a powerful advocate for regulating digital currencies.

"Virtual currencies, like Bitcoin, are more and more used by organised and serious crime groups," ACIC said in the report of its on Australian organised crime, released in August.

"They are a form of currency that can be sold anonymously online, without reliance on a central bank or financial institution to facilitate transactions."

They may be utilized on darknet marketplaces as Silk Road 3.0 and Valhalla Marketplace to facilitate the sale and trafficking of illicit drugs, firearms, precursor chemicals and kid exploitation materials.

They're additionally the currency of choice with regards to cyber attacks.

The hackers behind the Wannacry ransomware attack, which infected close to hundred countries all over the world demanded their ransom be paid with Bitcoin.

Which had also been the situation with the Petya cyber attack in June, which targeted the Cadbury chocolate factory in Tasmania.

But the buying and selling of Bitcoin and similar virtual currencies is now unregulated in Australia because of a loophole in existing laws.

The loophole would be that the term "e currencies" is defined way too especially in the Anti Money Laundering and Counter Terrorism Financing Act.

"E-currencies" are actually described as "an internet based, electronic means of exchange" backed by something physical such as a "precious metal" (silver or gold), or perhaps "bullion".

This particular issue was pointed out by the Attorney-General's Department's (AGD) submissions in submissions to the Senate.

Particularly, the AGD said this particular definition doesn't cover Bitcoin. That's because the digital currency isn't backed by physical assets at all - but by a "cryptographic algorithm".

"This regulatory gap is additionally having an influence on public perception and the legitimacy of the digital currency sector, which might impede developments or maybe the usage of the currencies in the future," the AGD said.

A diverse industry response

There's a "legacy stigma" with digital currencies, and that individuals regrettably associate Bitcoin with crime, Independent Reserve's director Lasanka Perera said.

"These brand new laws will be great for the industry, it is going to give far more confidence to investors, businesses and consumers to get into the industry," he said.

But a few digital currency businesses think that the anti money laundering bill imposes unduly aggressive obligations.

"The proposed legislation is going to have the outcome of requiring KYC [Know The Customer] procedures of yours of the clients of ours for even tiny transactions," said Daniel Alexiuc, who operates the internet business known as Living Room of Satoshi.

He said this has small transactions like "paying the mobile phone bill of yours or even purchasing a banh mi (Vietnamese bread roll) for lunch".

Through Mr Alexiuc's site, customers are able to use Bitcoin and ten other cryptocurrencies to pay their household bills - so long as they've BPAY facilities as ANZ Bank, Optus and Australia Post.

Mr Alexiuc made submissions to the Senate's legal affairs committee arguing that there ought to be an exemption for payments under $1,000.

The matter of his is actually, under the proposed laws, he will be expected to ask the customers of his to offer photo identification before they purchase for an account.

"It is going to kill the retail payment process of ours, and those new laws are totally unfeasible," he said.
The law presently doesn't need digital currency exchanges to conduct an identification check on customers that open accounts

Nevertheless, several of the operators that spoke with the ABC said they, nonetheless, request "100 points of ID" from the customers of theirs since it's "best practice".

The imposition of new regulations on digital currency exchanges might also impose higher entry barriers to new entrants.

"There is apt to be a continuing costly compliance cost, especially in respect to continuous transaction monitoring," said BTC Markets' director Jarrod Crane, who's supportive of the proposed laws.

Nevertheless, he conceded that: "If this regulation was around in 2013, we likely would not have been in a position to begin our business."

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