A Senate inquiry has found bitcoin and other cryptocurrencies should be recognised as a regular currency for Goods and Services Tax purposes, overturning an earlier Australian Taxation Office ruling that classifies it as an "intangible asset," and providing incentive for start-up bitcoin operators to stay in the country.

The Senate Economics References Committee into digital currency, which was chaired by Labor Senator Sam Dastyari, is expected to make the recommendation when the completed report is tabled in the Senate this week. It will be seen as a major boost to the local bitcoin industry, which was hit hard by the July 2014 ATO ruling, as it meant transactions are hit by GST and are also subject to capital gains and fringe benefits tax.