Australian Bill Addresses Cryptocurrency Regulation

On August 17, 2017, Minister of Justice Michael Keenan announced that the Australian Parliament will bolster the Anti-Money Laundering and Counter-Terrorism Financing Act. Now, the Parliament of the Commonwealth of Australia has posted on its website a bill amendment. The proposed legislation would officially bring certain cryptocurrency regulation under the scope of Australian law.

The bill defines digital currency as follows:

(a) a digital representation of value that

(i) functions as a medium of exchange, a store of economic value, or a unit of account; and

(ii) is not issued by or under the authority of a government body; and

(iii) is interchangeable with money (including through the crediting of an account) and may be used as consideration for the supply of goods or services; and

(iv) is generally available to members of the public without any restriction on its use as consideration; or

(b) a means of exchange or digital process of crediting declared to be digital currency by the AML/CTF Rules; but does not include any right or thing that, under the AML/CTF Rules, is taken not to be digital currency for the purposes of this Act.

Additionally, the bill establishes the “Digital Currency Exchange Register,” which would be maintained by the CEO of the Australian Transaction and Reports Analysis Centre (AUSTRAC). Digital currency exchanges operating in Australia would need to register themselves through AUSTRAC, a procedure that could take 90 days or more.

The bill also lays out tough penalties for unregistered digital currency exchange service providers, including jail time and fines. For first-time offenders, the punishment includes imprisonment for 2 years and/or 500 penalty units (penalty units vary by territory, but one unit is equivalent to more than $100 AUD in every Australian territory). Repeat offenders could face up to 7 years in prison and/or 2,000 penalty units.

Keenan seems very happy with the nation’s progress. He said, “These reforms appropriately balance the threat of organized crime and terrorism financing to the Australian community with ensuring excessive regulation doesn’t hinder our financial sectors.”

The proposed amendments come soon after the Australian government accused the Commonwealth Bank of extensive violations of existing AML/CTF law. From November 2012 to September 2015, the Commonwealth Bank allegedly failed to report more than 53,000 transactions that exceeded $10,000 AUD.

On the whole, the Australian government has been proactive in its approach to cryptocurrency. In 2017 alone, there has been a bipartisan effort to establish a national digital currency and two Australian senators launched a Parliamentary Friends of Blockchain group. On a global level, Australia serves as Secretariat of the ISO/TC 307, a multi-national effort to establish standards for blockchain and distributed ledger technologies. And, on a local level, Australian schoolchildren have been exposed to the blockchain revolution.