The best way to buy bitcoin is to use the digital currency to buy something that is not yet legal in Australia, according to the country’s top financial regulator.
Key points:The Australian Competition and Consumer Commission is proposing to require bitcoin companies to register with the Federal CourtThe regulator wants companies to show “good cause” why the use of bitcoin would harm consumersKey points :Bitcoin is already illegal in Australia and is already being used for illegal activitiesIn a submission to the Federal Government, the ACCC said it has received more than 200,000 submissions to its proposal, with more than half of those coming from companies that operate in Australia.
But, the regulator has yet to receive an official response from the Government, which has refused to provide the submission to it.
“Bitcoin is currently illegal in Australian jurisdiction, with its use for illegal activity potentially causing harm to consumers, consumers’ ability to purchase goods and services, or harm to financial stability,” ACCC chairman Rod Sims said in a submission.
“While the ACCCs proposal will require bitcoin to be registered with the Financial Services Commission, we do not believe the use and distribution of bitcoin is an illegal activity and are not proposing a registration regime for it.”
Bitcoin is used to buy goods and to transact with other people online, so it has become a popular alternative to traditional payment systems such as Western Union, but it remains illegal to transact in Australia unless you are a resident.
The regulator is proposing that bitcoin companies must register with ASIC as an intermediary between them and the Commonwealth, meaning they would need to prove to the Australian Securities and Investments Commission that they would be able to handle the use in the industry.
But it would not require the companies to identify the financial institution that is the financial intermediary.
“We believe the best way for companies to comply with this is to ensure that they register as an authorised financial institution with ASIC,” Mr Sims said.
“It would allow them to be able easily to comply, as it will provide the relevant authorities with the information needed to make the registration request.”
For example, we would be happy to provide ASIC with information on the financial institutions that are authorised to provide investment advice.
“Bitcoin companies would need a minimum investment of $250,000 in order to get the registration requirement, but they would also need to register their products with ASIC if they wanted to offer bitcoin as an alternative payment method.
The ACCC also wants bitcoin companies who are selling bitcoins to customers to register as a money service business (MSB), or money transmitter, and would require the customers to prove they were not in Australia to avoid having their funds seized.”
An MSB would not need to be a financial institution, but must be able show that it is in the business of conducting and managing transactions for the purposes of remitting payments to customers,” Mr Simpson said.
The proposal has been proposed in a draft legislation for the next financial year, which will come into effect in September.