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Regulators slow to keep up digital currencies

Rebecca Thistleton (via AFR) | May 15, 2013
Australian regulators and government show little sign of keeping up with emerging digital currencies such as ­Bitcoin despite their four years existence.

Regulators slow to keep up digital currencies
Cufflinked owner Niki Glavich said Bitcoin transactions cost less than 1 per cent and were cheaper than PayPal or credit cards.Photo: Bloomberg

Australian regulators and government show little sign of keeping up with emerging digital currencies such as ­Bitcoin, although they have been in use for about four years.

Foreign government agencies are examining the legal and tax implications but Australian officials are giving only mild attention to the currency development, based on inquiries by The Australian Financial Review.

A spokeswoman for the Australian Taxation Office said a decision had not been made regarding whether the tax implications for trading in digital currencies were similar to foreign currency trading or commodity trading. "We are still considering the implications," she said.

The Australian Prudential Regulation Authority referred queries to the Reserve Bank of Australia, which declined to comment.

A spokesman for NSW Treasurer Mike Baird said Bitcoin was "an interesting idea", adding the state government "will monitor developments in this space over time".

In Victoria, the state treasurer's office referred questions to the State Revenue Office, whose commissioner, Paul Broderick, said the SRO was "keeping an eye on Bitcoin". "At the moment it is in its embryonic stage of both development and acceptance," he said.

While Bitcoin is unregulated, the need for scrutiny is rising as the currency becomes more widely publicised and accepted as payment.


TAX AND CRIME IMPLICATIONS
In Britain on Monday, officers from such agencies as Revenue and Customs, the Serious Organised Crime Agency and the Home Office met to discuss potential tax and crime implications. In the US, a Treasury unit has established rules for Bitcoin and the Internal Revenue Service is expected to follow.

Executives of established payment methods are watching. MasterCard's global head of emerging payments, Jorn Lambert, called it a "cool idea" that would not reach mass adoption. A ­PayPal spokeswoman said alternative currencies had the potential to be "disruptive" but were still in infancy.

"We're closely following this area and look forward to seeing how it develops" she said.

Australian businesses have begun accepting payment, including ­Melbourne property buyers' agent Paul Osborne and online store Cuff­linked.com.au.

Cufflinked owner Niki Glavich said Bitcoin transactions cost less than 1 per cent and were cheaper than PayPal or credit cards. "With Bitcoin values generally trending upwards, more often than not any fees will be covered by the increase in Bitcoin value by the time we withdraw the cash," she said.

"It's quite a straightforward process and we haven't experienced any issues with it so far."

 

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