The Senate’s Economic References Committee has been given the green light to launch an inquiry into digital currencies like Bitcoin and their use in Australia.
Committee chair, Labor’s Sam Dastyari, successfully moved to start the investigation in the upper house earlier today, and set down the first sitting day in March 2015 as the deadline for its findings.
The motion comes just over a month since the Tax Office issued long-awaited guidance on how it intends to treat crypto-currency earnings and transactions for tax purposes.
The ATO's confirmation that it will view Bitcoin and its ilk in the same way as non-currency assets – meaning non-commercial trades won’t attract a tax bill until they meet a $10,000 capital gains tax threshold - has not pleased everyone, however, with taxation lobby groups arguing digital currency should be treated in the same way as physical currencies.
The senate inquiry will evaluate Australia’s options when it comes to regulation of digital currencies - including whether or not the ATO’s ruling represents the most appropriate approach - as well as how to build a system of regulation that balances growth in the digital currency industry against stability of the financial services sector and the economy.
It will also look at how to protect against the use of anonymous currencies for criminal ends, even though Australia’s criminal finance auditors at AusTrac say they are not overly concerned by the threat at this stage.
The senate committee has reserved particular attention to the potential for digital currencies to disrupt the payments, retail and banking sectors.
The Australian Digital Currency Commerce Association (ADCCA) leapt to endorse the review, and has already called on the panel to consider reversing the ATO’s tax stance and shift digital currency regulation into the hands of AusTrac .
“I am pleased the inquiry announced today will look at tax treatment issues, which I hope will lead to a correction of the current interpretation of Bitcoin as taxable supply," chairman Ronald Tucker said.
“It is important that government regulation encourages innovation, entrepreneurship and growth in this sector, which will help create more jobs and make Australia a leader in the [financial technology] space."