Australian Senate Committee Proposes Overhaul of Cryptocurrency Taxes, DAOs, and Exchange Licenses
The Senate Committee for Australia’s Technology and Financial Center (ATFC) has presented its third and final report in Parliament, which contains 12 comprehensive recommendations on regulating the digital asset and fintech industry.
It proposes new licenses for exchanging cryptocurrencies, new laws regulating decentralized autonomous organizations, major changes to capital gains tax in DeFi, and tax rebates for crypto miners who use renewable energy.
Overall, the report finds that more regulatory clarity and security are needed while avoiding stifling innovation with stringent requirements.
A key recommendation is to establish a new DCE digital currency trading market license that includes capital reserve and auditing requirements. The requirements must be scalable so that smaller operators are not forced out of the market.
The capital gains tax rules should be updated to provide more clarity on the tax treatment of crypto assets and DeFi stakes. The commission suggested that, unlike the current system, capital gains tax should only be levied if cryptocurrency transactions “actually result in a clearly identifiable capital gain or loss”.
The committee also recommended that the Treasury Department conduct a policy review on the viability of central bank digital currencies (CBDCs) and come up with a proposal to lower the corporate tax rate by 10% for businesses.
One of the most important recommendations worldwide is the creation of a new regulatory structure for DAOs that deals with decentralized community ownership and the management of a protocol.
“DAOs are clearly not part of an existing Australian corporate structure … this regulatory uncertainty prevents significant projects from being set up in Australia.”
Asher Tan, CEO of the Australian cryptocurrency exchange Coinjar, praised Senate Committee Chairman Andrew Bragg and the team for the “forward-looking approach they have taken with the regulatory framework”.
“In our view, the AFTC report takes laudable optimism about blockchain technology as a historic innovation – and one that comes with the right opportunities and risks.”
The committee heard from a number of industry experts and stakeholders including Blockchain Australia, leading exchanges and companies like R3 and Ripple. It was then recommended that any regulatory framework should “use a risk-based approach to identify digital asset services that pose sufficient risk to warrant regulation”.
Steve Vallas, head of Blockchain Australia, said the organization would like to hear from stakeholders and industry for their feedback on the recommendations.
Senator Bragg said the proposed regulations would help Australia become a leader in digital assets.
“The Commission has proposed a comprehensive framework for cryptocurrencies to take the lead in Australia. We will compete with Singapore, Great Britain and the USA. “
“This will boost investment and jobs in Australia,” he added.
Related: The average Australian crypto portfolio grew 258% in FY 20-21, a survey shows
The Australian Tax Service estimates that more than 600,000 taxpayers have invested in digital assets in recent years. Independent research shows that 17% of Australians currently own crypto.
The report concludes that a strong regulatory framework is needed to protect consumers, encourage investment in Australia and remain competitive globally.
“The potential economic opportunity is enormous if Australia can create a future-oriented environment for new and emerging digital asset products.”