Industry applauds bitcoin tax blitz

The Australian bitcoin industry has welcomed moves to tax the digital currency.

Australian technology players have welcomed moves to tax bitcoin.

Australian technology players have welcomed moves to tax bitcoin, with local executives declaring it’s time regulation on the the digital currency was ramped up.

As exclusively revealed by The Australian this week, tax-dodging Bitcoin investors will be investigated by the tax ­office, which said it will use anti-money laundering legislation due to come into force next month.

Sam Lee, chief executive officer of Blockchain Global, which manages the production of roughly 1.5 per cent, 4 per cent, and 2 per cent of bitcoin, litecoin and ethereum respectively, told The Australian that without the tax guidances from the ATO in 2014 on crypto currencies, Blockchain Global wouldn’t have grown from what he described as a Melbourne start-up to a global technology powerhouse.

“As a blockchain technology venture builder, our investment criteria and success depends on regulatory clarity, therefore we support the tightening of regulations around cryptocurrencies which allows us to deploy more funds in the jurisdictions we operate,” he told The Australian.

“We welcome regulation that will see further transparency, clarity and trust among the industry, including consumer confidence in this new investment asset class.”

Asher Tan runs Melbourne-based bitcoin start-up CoinJar, and said many aspects of digital assets are out of control of governments; because by design bitcoin is made to be censorship resistant.

“However service providers such as exchanges may already resemble existing regulated services such as foreign exchange dealers, or trading platforms. It makes sense that similar rules should apply,” he said.

Nick Byrne, CEO of blockchain venture studio Typehuman, said the crackdown was inevitable.

“People who are trading cryptocurrency, and profiting in fiat terms from it need to pay their taxes,” he said.

“The taxing of crypto will become more difficult for regulators as we see more anonymous crypto-assets launch this year, along with decentralised exchanges as the ATO will not have access to the same amount of transaction data it has today.

“The Australian government needs to walk a fine line between regulating, and being seen as a favourable country to operate in, so we can continue to attract and develop the crypto ecosystem. If the government comes down too hard, we risk alienating ourselves from the talent networks required to advance one of the most profound innovations we have seen in a generation.”

Mayfair 101 managing director James Mawhinney agreed, and said the government needs to be careful not to stifle the opportunities that digital currencies are affording innovative Australian businesses.

Mr Mawhinney’s company, a boutique investment firm based in Mebourne, recently shifted its business towards cryptocurrencies with six of the companies Mayfair invests in are conducting ICOs looking to raise a combined $1bn.

“We are seeing substantial opportunities for innovative Australian businesses to access growth capital like never before which will help put them on the world stage much sooner in their business life cycle,” he said.

“It represents an exciting time for innovation and we are hopeful that the government agencies are embracing this change to keep our country globally competitive.

“It is evident that the regulators around the world are being challenged by the rapid uptake of cryptocurrencies and in particular the relatively low barrier to entry for investors. While the likes of the United States has been quick to enforce guidelines around cryptocurrencies, Australia inherently likes to follow the decisions of other countries in a considered way prior to firming up its regulatory policies.”

As reported this week under the legislation the ATO will use compulsory 100-point identification checks for Bitcoin investors as part of its new arsenal, giving it the ability to roll out its data-matching techniques to take on the previously opaque cryptocurrency world.