The cryptocurrency industry said on Wednesday that it was disappointed with Australia’s decision to continue treating digital currencies as assets for tax purposes and not as foreign exchange.
The government said in its budget announcement on Tuesday that it would introduce legislation to establish the treatment of digital currencies such as bitcoin as an asset.
This means that investors will pay capital gains tax on gains when selling crypto assets through exchanges and trading digital assets.
The law removes the uncertainty following El Salvador’s decision to adopt bitcoin as legal tender in September last year, the Australian government said in its budget announcement.
Australia said, however, that a government-issued digital currency, or central bank digital currency (CBDC), would be treated as a foreign currency.
Nearly 90% of the world’s central banks are now using, testing or investigating CBDCs. Most do not want to lag behind bitcoin and other cryptocurrencies, but are grappling with the technical complexities.
Michelle Travers, a former cryptocurrency exchange operator and founder of blockchain advisor Solbis, said the budget change was unclear and appeared to be at odds with government testing into the viability of CBDCs.
“It is highly recommended for the government to take a truly enforcement approach to the taxation of crypto assets in their early stages, especially considering the fact that the Treasury may be investing in trying to migrate to traditional technology systems. What is taking our financial system back to digital assets,” Travers said.
“It would be an ironic dichotomy if they implement the taxation of digital assets and then launch their own CBDC without a clear definition of which tokens equate to tax treatment.”
The crypto sector is largely unregulated in Australia and the Treasury said in August that it would prioritize ‘token mapping’ work, which would help identify how crypto assets and related services should be regulated.
El Salvador, which adopted bitcoin as legal tender last year, has suffered huge economic losses from a sharp drop in crypto prices.
“I think they are taking a snapshot in time and evaluating what happened in El Salvador and around the price of bitcoin for a long time,” said Carolyn Bowler, CEO of BTC Markets, an Australia-based cryptocurrency exchange. Australia has to be added. It has been left behind by other counties that are taking a more open-minded approach.
“Europeans are going to move on, the UK now has a prime minister who is familiar with central bank digital currencies,” Bowler said. “Unless we are looking at proportional, responsible regulation, all these trading partners will move beyond Australia.”
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)