Bitcoin evangelist Andreas M Antonopoulos has appeared before the Australian Senate as part of an inquiry into the local treatment of digital currencies.
The prominent bitcoin ‘guru’ made the case for bitcoin, saying that its unique architecture and payment mechanism had important implications for network access, innovation, privacy, individual empowerment, consumer protection and regulation.
Claiming that bitcoin represented a “unique opportunity in two areas for Australia”, Antonopoulos said:
“Bitcoin can introduce much needed competition in the retail payments industry, undercutting the expensive systems offered by credit and debit cards, whilst significantly improving security and privacy for consumers.”
“Secondly, the bitcoin industry can establish Australia at the forefront of the next wave of innovation of financial services. A wave that can extend financial services to more than two billion people throughout Southeast Asia, who are currently unbanked,” he continued.
Benefits of the technology
The information security expert noted that Australian was already the home of a thriving bitcoin industry, but spoke of its potential to “become a leader in the region and the world”.
Antonopoulos also compared the centralised banking system to bitcoin’s decentralised offering, highlighting the cryptocurrency’s security levels:
“If a bad actor infiltrates a traditional financial network, the network itself and all of its participants are at risk. In contrast, if a bad actor has access to the bitcoin network, they have no power in the network itself and they do not compromise trust in the network.”
“Contrary to popular misconception, bitcoin is not unregulated. Rather, several aspects of the bitcoin network and financial system are regulated by mathematical algorithms. The algorithmic regulation in bitcoin offers predictable, objective, measurable outcomes.”
“Algorithmic regulation provides certainty without nationalist or geopolitical influence. In a time of unprecedented currency wars, mathematical neutrality is a safe haven”, he concluded.
Australia talks regulation
According to ZDNet, the Australian Treasury Department’s Kate Preston, who is responsible for advising the government on revenue and taxation policy, told the Senate committee inquiry that the existing tax treatment would suffice whilst bitcoin was still in its early stages.
Preston, general manager at the Department’s Revenue Group, was also cited as saying, that in her opinion, there were no issues with the way that the Australian Taxation Office (ATO) has dealt with the emergence of digital currencies.
She added that ATO would continue to assess the situation, stressing “that it is an industry, if you like, that is in its infancy”.
Appearing as a witness in the proceedings, Preston was responding to comments posed by committee chair and Labor Senator Sam Dastyari, who put forward the fact that local bitcoin businesses were likely to move offshore so as to avoid the ATO’s current tax regime for digital currencies.
Speaking to CoinDesk, Queensland Senator Matt Canavan, said:
“Regulation is a bit like aspirin, though. We need just the right amount to ensure that commerce flows through our economic arteries, but too much or too little and we can lose the patient.”
The ATO released its guidance on the taxation of bitcoin and other cryptocurrencies in Australia last August, saying that “transacting with bitcoin is akin to a barter arrangement, with similar tax consequences”, unless it was used for business purposes.
ATO’s view is that “bitcoin is neither money nor a foreign currency, and the supply of bitcoin is not a financial supply for goods and services tax (GST) purposes”. However, the guidance outlined that “bitcoin was an asset for capital gains tax (CGT) purposes.
The ATO’s consideration of bitcoin as a digital commodity, as opposed to a fiat currency as such as the Australian dollar, means that the digital currency is being taxed twice. Firstly, when it is sold and then again when it is purchased.