Big decision on crypto tax rules in Australia

The Australian Government has made a major announcement on cryptocurrencies after a big decision on the treatment of Bitcoin overseas.

The Australian Government has confirmed crypto currencies will continue to be excluded from foreign currency tax arrangements following a major announcement overseas.

The decision follows a move by El Salvador to allow Bitcoin as legal tender.

Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones said the decision had the potential to create uncertainty about the status of Bitcoin and other crypto assets for tax purposes in Australia.

The government will move to legislate the current tax arrangements, meaning crypto assets will not be regarded as foreign currency for tax purposes in Australia.

Capital gains tax will continue to apply to crypto assets held as investments.

The legislated changes will be backdated to July 1 last year.

The value of Bitcoin has plunged in recent days

“This gives certainty and clarity at a time of volatility for crypto currencies,” Mr Chalmers and Mr Jones said.

“The government will continue to take a pragmatic and timely approach to its role in the rapidly evolving digital currency landscape.”

It’s been a nightmare few months for cryptocurrency investors, with billions being wiped off the markets.

But there are warnings it’s about to get a whole lot worse.

The crypto winter has now turned into a “polar vortex”, a senior executive at one of the world’s largest banks said in a blunt admission this week.

For the entire year, cryptocurrency has been enduring a bear run.

However, last weekend things took a turn for the worse as investors panicked following the US central bank hiking the interest rate by 75 basis points.

Shadow Treasurer Jim Chalmers. (AAP Image/Mick Tsikas) NO ARCHIVING

It prompted fears a global recession and crypto investors quickly retreated, casing a mass sell off and a drastic drop in price for some of the world’s top-ranked blockchains.

Bitcoin plunged below $20,000 on Saturday, its lowest level since December 13, 2020.

World stock markets plunged this week amid fears that inflation-fighting interest rate hikes by the US Federal Reserve and other central banks could trigger a recession.

Cryptocurrencies have paid the biggest price.

Bitcoin’s fall has been accelerated by the suspension of withdrawals by two cryptocurrency platforms.

The Celsius Network said it was pausing “all withdrawals, swap, and transfers between accounts” due to “extreme market conditions.” Babel Finance said it was facing “unusual liquidity pressures.” Major exchange Binance temporarily suspended bitcoin withdrawals and advised customers to use other networks.

Coinbase said Monday that it was trimming 18 percent of its workforce, about 1,100 jobs, citing tight economic conditions and overly rapid expansion.

“We appear to be entering a recession after a 10+ year economic boom,” Coinbase founder and CEO Brian Armstrong said.

In recent years, the crypto sector benefited from a vast infusion of cash due to easy money policies from the world’s biggest central banks.

However, rampant inflation has sparked tighter monetary policy across the globe, helping to send the industry crashing.

- With AFP