Among the main tasks in this direction is to avoid too onerous regulation of the industry and the possible suppression of innovation in this area. Because of this, Australia may be of interest to many people in business around the world as a target jurisdiction for obtaining a license for the exchange of cryptocurrencies and carrying out operations with crypto assets here.
Regulation of the license for the exchange of cryptocurrencies in Australia
As of the end of 2021, the relevant legislation of Australia was at the stage of reform. The main aspects of the reform were the introduction of a new license, revising the requirements for reserves and auditing, reducing the tax burden, including the amount of capital gains tax, providing incentives for miners using renewable energy sources, etc.
Since 2009, Australia has had a Code of Conduct in virtual currencies (Australian Digital Currency Code of Conduct), including basic practices in this area, including security, working with personnel and clients, combating money laundering, etc.
In the issue of obtaining a license for the exchange of crypto-currencies in Australia, the local regulator (Australian Securities and Investments Commission) proceeds from the nature of the assets involved in operations. Suppose crypto-assets fall within the definition of financial products. In that case, a license is required to trade, store on behalf of a third party, provide consulting services about virtual currencies, and organize third parties’ sale and purchase of cryptocurrencies. The definition of such financial products is broad enough to include options where the entity:
- makes financial investments;
- manages financial risks;
- makes payments in non-cash form.
Examples of such financial products are stocks, bonds, derivatives, bank deposits, shares in joint investment schemes, etc. With such financial assets, services are provided that, accordingly, are economic in nature and are subject to a particular regulatory regime, namely:
- transactions with financial products (issue, acquisition, disposal of financial products, as well as other transactions with financial products on behalf of another person);
- providing advice in the field of financial transactions;
- provision of storage services;
- activities as a manager of investment schemes.
Our experts will be happy to advise you in more detail on the aspects of applicable law in your particular case.
Opening a crypto company in Australia
A local company can obtain a crypto license in Australia that meets some requirements, including anti-money laundering and counter-terrorism financing. The best option is to register a limited liability company. As its name suggests, the financial liability of its founders, in this case, will be limited only to the number of funds invested.
The crypto company registration process will cover the following approximate steps:
- Determining the types of transactions that investors intend to conduct through an Australian crypto company.
- Choice of organizational-legal form.
- The choice of names for the future crypto company, verification, and reservation.
- Collection of information and consents from shareholders and officials of the company, as well as information about the beneficiaries of the company.
- Choosing a legal address for the future company.
- Drawing up constituent and registration documents.
- Formation of a package of documents for registration.
- Direct company registration through the Australian Government’s Business Registration Service (BRS).
- Registration for tax and employment purposes.
- Opening a current bank account for a crypto company.
This is an approximate company registration model. Please get in touch with our specialists for detailed information on the issue.
Obtaining a license to exchange cryptocurrencies in Australia
The process for obtaining a crypto license in Australia covers the following approximate steps:
- Select the type of activity for which a license is required.
- Company opening.
- Collection of data on the founders, beneficiaries, and managers of the company, including their excellent reputation.
- Completing the necessary registration forms and forming a package of documents for submission to the regulator.
- Consideration of documents by the regulator with possible requests for additional information.
- Issuance of a license for the requested type of operations.
Our lawyers will be happy to advise you in more detail on obtaining a license in your particular case.
Compliance issues
Despite a loyal approach and legislation facilitating operations in the field of cryptocurrencies, the regulation of crypto licenses in Australia focuses on the issues of combating money laundering and terrorist financing. When evaluating the process, one should start from the degree of riskiness of the operations carried out by the operating company. Among other things, the following information may be required from the client: his full name, address of residence, and date of birth.
The operating company must, at a minimum, carry out the following actions:
- develop internal policies on countering money laundering and terrorist financing;
- conduct ongoing monitoring of transactions undertaken by clients;
- record cases of suspicious transactions with crypto assets;
- request from customers the information necessary to establish their identity and details of transactions;
- organize the storage of documents received from clients;
- inform authorized bodies about cases of suspicious transactions, as well as submit reports in a general manner;
- carry out actions aimed at minimizing and eliminating the risks associated with the laundering of proceeds from crime and financing of terrorism, as well as security issues;
- keep a permanent record of transactions with crypto assets;
- provide training to the company’s employees on the detection and prevention of cases of laundering of proceeds from crime and financing of terrorism.
Taxation
Companies that carry out transactions with crypto assets are subject to standard tax rates, namely:
- corporate tax – (1) basic – 30%, (2) for small/medium businesses – 25%;
- capital gains tax – corporation tax rates apply.
