The Mixed Fortunes of Bitcoin in Australia

While even the Bitcoin Foundation seems to be skeptical of increasing Bitcoin merchant diversity, an existing start-up has come forward to deliver some unadulterated good news on the Bitcoin ecosystem.

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The Mixed Fortunes of Bitcoin in Australia

While even the Bitcoin Foundation seems to be skeptical of increasing Bitcoin merchant diversity, an existing start-up has come forward to deliver some unadulterated good news on the Bitcoin ecosystem.

The US Bitcoin scene is palpably strained following increased FinCEN regulations on money transmission, but the picture elsewhere, as painted by Coinarch, is apparently a lot rosier – even a cause for celebration.

Coinarch is a trading platform registered in Singapore but with strong connections to the Australian market, an environment which has recently also become more problematic for certain types of Bitcoin start-ups. In August, regulators announced that fiat-digital transactions would be subject to Australian general sales tax (GST), increasing costs for those wishing to explore Bitcoin using AUD.

“The interesting thing with all of this is, of course, the response of government,” Co-founder Mark Hergott said in an interview.

“The federal government is due to commence a Senate committee inquiry into Bitcoin shortly, with its findings due early next year. The hope is that this committee sees sense and avoids rules like those recently announced by the ATO which said that Bitcoin purchases are GST applicable, something which could greatly affect the practicality of using Bitcoin.”

Whether existing legislation will be reversed is open to speculation, but with the current direction taken in the US, it seems similar economies have little incentive to buck the trend.

Mark Hergott, Coinarch Co-founder

Hergott, however, points to recent successes in the UK financial environment, which show that such an occurrence is still possible. He said:

“The good news is that we saw the British tax authorities do something similar early this year and then quickly reverse the decision when they realised how impractical and detrimental it was to this exciting new industry, so there is hope!”

On the topic of Australia, there is nonetheless little to celebrate at present. Although Hergott cheerfully adds that “the statistics say that Australians are among the most enthusiastic Bitcoin people globally,” a glance at those of services such as Fiatleak demonstrate that China and the US still hold the lion’s share of Bitcoin activity by a considerable margin.

Whereas usage prior to official legislation in the two countries was already high, Australia could well prove to be a tougher environment going forward, and there could potentially be less of an incentive for lawmakers to accommodate those users’ activities in future.

Silver lining in consumer poll

In the meantime, Bitcoin in Australia continues to grow. The launch of Independent Reserve, an exchange facilitator providing a meeting environment for traders, launched this week out of Sydney.

“We provide an open marketplace for buyers and sellers to meet – we don’t buy or sell Bitcoin in its own right,” CTO Adrian Przelozny said in a press release issued earlier this month.

The move ensures the service need not be subject to GST requirements, while CEO Adam Tepper is confident in using Australia as a base on the back of positive survey results and extensive consultation with authorities.

“Australia is politically stable with a strong regulatory regime,” he said. “We have spoken consistently with ASIC and the ATO as Independent Reserve has developed, as well as had the company audited by PricewaterhouseCoopers. We’re very comfortable that we have the right settings here to ensure its safety and success.”

Independent Reserve’s Bitcoin Use Survey involved 442 consumers aged between 18 and 74, of which “20% said they definitely planned to use Bitcoin in the future, while 60 % said they possibly would,” according to the press release.

If such figures are representative of a larger demographic, Coinarch’s optimism may well be on-point. “The next 18 months could be huge for Bitcoin,” he surmises, adding that “the uptake on owning and trading Bitcoin globally has been nothing short of amazing.” 

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