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Crypto in Australia’s Budget: What it Means

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Australia’s federal budget clearly mentions cryptocurrency, providing clarity on the country’s approach to digital assets, according to industry observers.

In the budget presented Tuesday, the country reaffirmed June’s announcement that bitcoin wouldn’t be considered a foreign currency for tax purposes. It also clarified that it would not emulate El Salvador by making bitcoin legal tender.

The mention of cryptocurrencies in the federal budget documents is a sign that they are becoming increasingly popular. 

This budget criticizes El Salvador, which adopted Bitcoin as its legal tender last year and is now suffering the negative effects of the adoption after the huge drop in bitcoin price last year.

The budget says that El Salvador’s decision to recognize bitcoin as a legal tender could cause uncertainty about the tax status of crypto assets in Australia. “This clarification will deliver a consistent tax requirement for crypto asset holders.”

Cryptocurrencies will now be treated as assets, and investors will have to pay capital gains tax on profits when they sell or trade digital currency.

It is clear from the budget documents, however, that the Central Bank Digital Currency (CBDC) and cryptocurrencies launched by the government will be treated as foreign currencies.

According to the tax office, since 2018, more than one million taxpayers have interacted with the crypto ecosystem in some form.

It is noteworthy that 90% of the world’s central banks are interfacing, developing, or testing the CBDCs program for faster and cheaper cross-border payments. Bitcoin and other digital currencies appear to be useful financial instrument for every country. But, technological complexity appears to be one of the most critical issues.

In Australia, the crypto sector is largely unregulated, and the Treasury stated in August that it would prioritize the ‘token mapping’ work in order to identify how crypto assets and related services should be regulated in order to improve the sector’s regulatory environment. Nevertheless, buying and selling Bitcoin Australia is easy since there are many licensed Bitcoin traders available.

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