On May 30, 2019, the Australian Securities and Investment Commission (ASIC) published updated guidance with respect to initial coin offerings (ICOs) and cryptocurrency trading. That guidance takes the position “that ICOs by their nature seek to raise capital from the public to fund a particular project through the issue of crypto-assets such as tokens.” If the crypto-asset issued by the ICO is a financial product (such as an interest in a managed investment scheme or a security), the issuer of the ICO must comply with relevant capital raising provisions of the Corporations Act, AFS licensing requirements and other regulatory requirements.
ICO issuers are also required to comply with other Australian law, such as the Corporations Act, ASIC Act and the Australian Consumer Law, as well as anti-money laundering (AML) and know your client (KYC) obligations.
For ICOs and crypto-assets that are financial products, the ASIC Act and the Corporations Act include prohibitions against misleading or deceptive conduct.
Regulatory Guide 234 Advertising financial products and services (including credit): Good practice guidance (RG 234) contains guidance to help businesses comply with their legal obligations not to make false or misleading statements or engage in misleading or deceptive conduct.
Under Australian law, the rights attached to crypto-assets issued under an ICO are a key consideration in assessing its legal status as a financial product. These rights are generally described in the ICO’s ‘white paper’, an offer document issued by the business making the offer or sale of an ICO crypto-asset. Rights may also be determined from other circumstances (e.g. how the ICO or crypto-asset is marketed to investors).
Certain ICOs may constitute a managed investment scheme under Australian law.
A managed investment scheme is a form of collective investment vehicle. It is defined in the Corporations Act and has three elements:
- people contribute money or assets (such as cryptocurrency or other crypto-assets) to obtain an interest in the scheme (subject to limited exceptions, ‘interests’ in a scheme are generally a type of ‘financial product’ and are regulated by the Corporations Act)
- any of the contributions are pooled or used in a common enterprise to produce financial benefits or interests in property (e.g. using funds raised from contributors to develop the platform), for purposes that include producing a financial benefit for contributors (e.g. from an increase in the value of their tokens), and
- the contributors do not have day-to-day control over the operation of the scheme but, at times, may have voting rights or similar rights.
Moreover, when an ICO is created to fund a company (or to fund an undertaking that looks like a company) then the rights attached to the crypto-asset issued by the ICO may fall within the definition of a security – which includes a share or the option to acquire a share in the future.
More on Australian Cryptocurrency and The Development of Australia’s Regulatory Stance 
In August 2015, the Australian Parliament’s Senate Economic References Committee published a report titled “Digital Currency – Game Changer or Bit Player,” following the completion of an inquiry into “how to develop an effective regulatory system for digital currency, the potential impact of digital currency technology on the Australian economy, and how Australia can take advantage of digital currency technology.” The government responded to the Committee’s recommendations in May 2016. This included responses regarding the tax treatment of cryptocurrencies, which noted aspects of the following actions of the Australian Taxation Office (ATO).
The ATO has published a guidance document on the tax treatment of virtual currencies. The general guidance follows the finalization, in December 2014, of various rulings relating to the application of tax laws to bitcoin and other cryptocurrencies.According to the guidance, transacting with cryptocurrencies is “akin to a barter arrangement, with similar tax consequences.”This is because, in the view of the ATO, such currencies are “neither money nor a foreign currency.” Individuals who engage in cryptocurrency transactions are advised to keep records of the date of transactions; the amount in Australian dollars (“which can be taken from a reputable online exchange”); what the transaction was for; and who the other party was (“even if it’s just their bitcoin address”).
Cryptocurrencies may be considered assets for capital gains tax purposes, with the guidance stating: “Where you use bitcoin to purchase goods or services for personal use or consumption, any capital gain or loss from disposal of the bitcoin will be disregarded (as a personal use asset) provided the cost of the bitcoin is $10,000 or less.”
With regard to business transactions, the ATO guidance states that the Australian dollar value of bitcoins (being the fair market value) received for goods and services must be recorded as part of ordinary income, in the same way as receiving non-cash consideration under a barter transaction. A business that purchases items using bitcoin is “entitled to a deduction based on the arm’s length value of the item acquired.” Goods and services tax (GST) is also payable and is calculated on the market value of the goods or services, which is “ordinarily equal to the fair market value of the bitcoin at the time of the transaction.” When a business disposes of bitcoin, there may be capital gains tax consequences. If a business gives bitcoin to an employee this may be considered either a fringe benefit (if there is a valid salary sacrifice arrangement in order to receive the bitcoin) or normal salary and wages. If an entity is in the business of mining bitcoin, or buying and selling bitcoin as an exchange service, any income derived must be included in its assessable income, and any expenses incurred may be deducted.
The ATO has also published separate guidance on the application of the goods and services tax (GST) with respect to transactions involving digital currency. A previous ruling regarding GST was withdrawn in December 2017 following the passage of amendments to A New Tax System (Goods and Service Tax) Act 1999 and associated regulations, which apply to transactions after July 1, 2017. Under the amendments, sales and purchases of digital currency are not subject to GST. If a person is carrying on a business in relation to digital currency, or accepting digital currency as a payment as part of a business, then there are GST consequences. The changes were aimed at removing “double taxation” of digital currencies under the GST system.
According to news reports from January 2018, the ATO is consulting with tax experts “to help it identify and track cryptocurrency transactions and ensure all taxes are being paid.”
The Australian Securities and Investments Commission’s (ASIC’s) MoneySmart website provides information on virtual currencies and sets out various risks associated with buying, trading, or investing in such currencies. These include the fact that there are few safeguards because the exchange platforms are generally not regulated; large fluctuations in value; possible theft by hackers; and the popularity of virtual currencies with criminals. A separate page provides information about initial coin offerings, which ASIC calls a “high-risk speculative investment.”
In the area of anti-money laundering and counterterrorism financing (AML/CTF), the government introduced a bill in Parliament in August 2017 in order bring digital currency exchange providers under the AML/CTF regulatory regime, as recommended by the Senate committee referred to above. The bill was enacted in December 2017 and the relevant provisions came into force on April 3, 2018.
Under the amendments, digital currency exchanges will be required to enroll in a register maintained by AUSTRAC (Australian Transaction Reports and Analysis Centre) and implement an AML/CTF program “to mitigate the risks of money laundering as well as identify and verify the identity of their customers.” They will also be required to report suspicious transactions and maintain certain records.
Tax Implications: For insights and information on Australia’s tax system and the U.S.-Australia tax treaty, see “Australia.”
 The following analysis is provided by the Library of Congress.
 Senate Economic References Committee, Digital Currency – Game Change or Bit Player (Aug. 2015), https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Digital_currency/~/media/Committees/economics_ctte/Digital_currency/report.pdf, archived at https://perma.cc/9C8Z-L76P.
 Digital Currency, Parliament of Australia, https://www.aph.gov.au/Parliamentary_Business/Committees/ Senate/Economics/Digital_currency (last visited Mar. 1, 2018), archived at https://perma.cc/T5XB-BNY2.
 Australian Government Response to the Senate Economic References Committee Report: Digital Currency – Game Changer or Bit Player (May 2016), https://www.aph.gov.au/DocumentStore.ashx?id=4f9bcf03-5867-449c-85ad-b8dd01d7459c, archived athttps://perma.cc/U6WP-VYKU.
 Tax Treatment of Crypto-Currencies in Australia – Specifically Bitcoin, Australian Taxation Office (ATO), https://www.ato.gov.au/General/Gen/Tax-treatment-of-crypto-currencies-in-Australia—specifically-bitcoin/ (last updated Dec. 21, 2017), archived at https://perma.cc/UFZ7-QSUG.
 ATO, Income Tax: Is Bitcoin a ‘Foreign Currency’ for the Purposes of Division 775 of the Income Tax Assessment Act 1997 (ITAA 1997)? (TD 2014/25), https://www.ato.gov.au/law/view/document?src=hs&pit= 99991231235958&arc=false&start=1&pageSize=10&total=7&num=3&docid=TXD/TD201425/NAT/ATO/00001&dc=false&tm=and-basic-TD 2014/25 (last visited Mar. 1, 2018), archived at https://perma.cc/DS47-Y2JW; ATO, Income Tax: Is Bitcoin a ‘CGT Asset’ for the Purposes of Subsection 108-5(1) of the Income Tax Assessment Act 1997? (TD 2014/26), https://www.ato.gov.au/law/view/document?src=hs&pit=99991231235958&arc= false&start=1&pageSize=10&total=7&num=2&docid=TXD/TD201426/NAT/ATO/00001&dc=false&tm=phrase-basic-TD 2014/26 (last visited Mar. 1, 2018), archived at https://perma.cc/B9QN-N4FM; ATO, Income Tax: Is Bitcoin Trading Stock for the Purposes of Subsection 70-10(1) of the Income Tax Assessment Act 1997 (ITAA 1997)? (TD 2014/27), https://www.ato.gov.au/General/Gen/Tax-treatment-of-crypto-currencies-in-Australia—specifically-bitcoin/ (last visited Mar. 1, 2018), archived at https://perma.cc/BS2E-UZKW; ATO, Fringe Benefits Tax: Is the Provision of Bitcoin by an Employer to an Employee in Respect of their Employment a Property Fringe Benefit for the Purposes of Subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986? (TD 2014/28), https://www.ato.gov.au/law/view/document?src=mm&pit=99991231235958&arc=false&start=1&pageSize=10&total=7&num=0&docid=TXD/TD201428/NAT/ATO/00001&dc=true&tm=and-basic-TD 2014/25 (last visited Mar. 1, 2018), archived at https://perma.cc/Y5FS-VYL3.
 Tax Treatment of Crypto-Currencies in Australia – Specifically Bitcoin, supra note 620.
 GST and Digital Currency, ATO, https://www.ato.gov.au/business/gst/in-detail/your-industry/financial-services-and-insurance/gst-and-digital-currency/ (last updated Dec. 8, 2017), archived at https://perma.cc/L2MT-WHHC.
 Goods and Services Tax Ruling: GSTR 2014/W, ATO, https://www.ato.gov.au/law/view/document?DocID= GST/GSTR20143/NAT/ATO/00001 (last visited Mar. 1, 2018), archived at https://perma.cc/6YAU-SYF3; Treasury Laws Amendment (2017 Measures No. 6) Act 2017 (Cth), https://www.legislation.gov.au/Details/C2017A00118, archived at https://perma.cc/6TB9-V9QU.
 GST and Digital Currency, supra note 630.
 GST – Removing the Double Taxation of Digital Currency, ATO,https://www.ato.gov.au/General/New-legislation/In-detail/Indirect-taxes/GST/GST—removing-the-double-taxation-of-digital-currency/ (last updated Dec. 18, 2017), archived athttps://perma.cc/L7KG-NWK2.
 Duncan Hughes, ATO Creates Specialist Task Force to Tackle Cryptocurrency Tax Evasion, Financial Review (Jan. 10, 2018), http://www.afr.com/news/policy/tax/ato-creates-specialist-task-force-to-tackle-cryptocurrency-tax-evasion-20180109-h0fyaz, archived at https://perma.cc/VNY2-R6G3.
 Virtual Currencies, ASIC’s MoneySmart, https://www.moneysmart.gov.au/investing/investment-warnings/ virtual-currencies (last updated Dec. 1, 2017), archived at https://perma.cc/SCJ8-2WS3.
 Initial Coin Offerings (ICOs), ASIC’s MoneySmart, https://www.moneysmart.gov.au/investing/investment-warnings/initial-coin-offerings-icos (last updated Nov. 10, 2017), archived at https://perma.cc/YYW7-SZMS.
 Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017, Parliament of Australia, https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r5952 (last visited Mar. 26, 2018), archived at https://perma.cc/3LS8-TZ5L; Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017 (Cth) sch 1 pt 2, https://www.legislation.gov.au/Details/C2017A00130, archived at https://perma.cc/892P-DQ5W.
 Digital Currency Exchange Providers, AUSTRAC,http://www.austrac.gov.au/digital-currency-exchange-providers (last updated Mar. 13, 2018), archived at https://perma.cc/X4DK-SJ8X.
 Rohan Pearce, Government Cracks Down on Bitcoin Money Laundering, Computerworld (Aug. 17, 2017), https://www.computerworld.com.au/article/626134/government-cracks-down-bitcoin-money-laundering/, archived athttps://perma.cc/PW5D-U3SD.