Australian Traders Are Avoiding Local Crypto Regulations

FinTech, Investing, Regulation | May 31, 2019 By:

Australia is definitely not the biggest cryptocurrency market, but it was sizeable enough for the local government to install a crypto regulation. The regulatory framework for cryptocurrencies is not that easy to come by. Usually, you’d find them with developed countries in Europe or across several Asian regions.

Australia adopting it was quite a surprise due to the relatively meager traded volume by its population. But despite the regulation, whose primary focus was to bring some kind of order to the market, track crypto transactions and ultimately tax the profits, is just a fenceless gate that crypto traders can easily go around.

How do they do it?

According to the Australian crypto regulatory framework, every crypto exchange registered and licensed in Australia is expected to deliver information about customer trading data, which they usually do.

Unfortunately for the government, there are very few Aussies who use local exchanges. Most of them go for Binance or other large exchanges. Due to the fact that Binance is in this limbo of uncertainty in terms of regulation, it technically does not need to adhere to Australian laws.

Overall, Binance can simply ignore the government’s demands for customer trading data. Nevertheless, cashing out cryptocurrencies is still an issue for most Australians, but several methods have also been found to avoid the watchful eye of the regulator.

Australian sneaky tactics

The Aussies managed to leverage the country’s rather unconventional gaming regulations. According to the Interactive Gambling Act 2001, no Australian gaming companies have the right to provide digital services to the local population. Only foreign companies have that right.

Therefore, due to the massively increased amount of Austrlian bitcoin slots games which can be played with other cryptocurrencies as well, these foreign operators became a make-shift third party payment provider.

What the Aussies usually do is, they transfer cryptocurrencies from foreign crypto exchanges onto their online casino accounts. Later, they cash them out through third party payment providers such as PayPal or Skrill. And last but not least, they cash out the funds on their bank accounts without the authorities knowing where these funds came from or what they were being used before.

Sure they subject themselves to a bit more in terms of revenue tax, but they are able to avoid the additional crypto tax. Overall, it is a much more effective way of saving money on taxes.

Is the government aware of this?

Of course, the Australian government is aware of this. They know full well that their citizens have found ways to avoid the system, but there is very little that they can do. Sure they can impose serious regulations on Binance if it wants to continue operations in Australia, or they could just revamp their gaming regulation.

But in all honesty, there is not too much being lost due to these “tax evasion” mechanisms. The citizens do end up paying more in revenue tax, so why double down on them paying even more with crypto tax. Overall, the country is still able to benefit from these maneuvers. It increases the customer’s purchasing power locally, as well as contribute to investment diversity and future financial security.

Making the gaming regulations more strict is going to hurt the government much more than it’s going to hurt the taxpayer. Just expelling foreign companies or demanding them to show their transaction histories (which they already do), would be a human rights issue, and not an economic issue.

At least with the banks, people know and agree that their data is being stored somewhere.

Overall, the Aussies truly managed to take this one out of the hat. Not only did they find mechanisms for reducing their cryptocurrency taxes, but it also turned out to be beneficial for the local economy. They still contribute more to the country in terms of revenue tax, all the while increasing their purchasing power and strengthening the economy.

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