Australia to regulate virtual currency exchanges like Bitcoin
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Virtual currencies offer an efficient and anonymous way to store and transfer funds online. Australia is set to regulate virtual currency exchanges such as Bitcoin and strengthen the powers of its financial intelligence agency AUSTRAC as it cracks down on money laundering and terrorism financing.
The changes came two weeks after AUSTRAC took the country’s biggest bank, the Commonwealth, to court for alleged “serious and systemic non-compliance” of money laundering and terror financing laws.
It follows similar reforms by Japan to regulate virtual currency, after the country found itself at the epicenter of a multi-million dollar embezzlement scandal following the collapse of the Tokyo-based MtGox Bitcoin exchange.
“Stopping the movement of money to criminals and terrorists is a vital part of our national security defenses and we expect regulated businesses in Australia to comply with our comprehensive regime,” Justice Minister Michael Keenan said Thursday.
He added that the digital currency exchange sector was being regulated for the first time, while low-risk industries such as cash-in-transit would be subject to fewer regulations.
Virtual currency has grown rapidly since the 2009 launch of Bitcoin, and there are now more than 100 crypto-currency options.
But the sector has suffered from highly publicized scandals like the 2014 collapse of MtGox.
Backers say virtual currencies offer an efficient and anonymous way to store and transfer funds online.
But critics argue the lack of a legal framework governing the currency, the opaque way it is traded and its volatility, make it dangerous.
Questions & Answers
Q.What is the primary reason for Australia introducing new regulations for virtual currency exchanges?
What is the primary reason for Australia introducing new regulations for virtual currency exchanges?
Australia is regulating virtual currency exchanges to crack down on money laundering and terrorism financing. This follows a case where the country's biggest bank was accused of non-compliance with existing laws.
Q.Which specific government agency will have strengthened powers as a result of these regulatory changes?
Which specific government agency will have strengthened powers as a result of these regulatory changes?
AUSTRAC, Australia's financial intelligence agency, will have its powers strengthened. This is intended to improve its ability to monitor and enforce compliance within the financial sector.
Q.Has a similar approach to regulating virtual currency already been taken by another country?
Has a similar approach to regulating virtual currency already been taken by another country?
Yes, Japan implemented similar reforms to regulate virtual currency. This occurred after the country experienced a multi-million dollar embezzlement scandal following the collapse of the MtGox Bitcoin exchange.
Q.How do virtual currencies generally compare to traditional financial transfers, according to their supporters?
How do virtual currencies generally compare to traditional financial transfers, according to their supporters?
Supporters of virtual currencies state that they provide an efficient and anonymous method for storing and transferring funds online. This efficiency is often cited as a key benefit of their use.
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