ForexMinute.com – Australia Securities and Investment Commission (ASIC) recently concluded that digital currencies like Bitcoin are not a financial product, and therefore could be excused from a number of current regulatory laws.
In their response to ‘Senate Inquiry into Digital Currency’, the finance regulators said that “digital currencies do not fit within the current legal definition of a ‘financial product’,” and therefore a person/business does not require to obtain certain licenses if he/she is operating a cryptocurrency trading platform, or is offering a service to hold/buy/sell a cryptocurrency on others’ behalf.
ASIC further provided a concrete definition of financial products, saying that they are contracts that are not settled immediately, or some facility through which a person makes a financial investment, manages financial risks, or makes non-cash payments. Overall, financial products are the contracts that fall under the corporate and ASIC Act; unlike Bitcoin, which has already been declares as a commodity by Australian Taxation Office (ATO).
In the same response, ASIC further pointed out few exceptions in which digital currencies will be termed as financial products. They include cases in which Bitcoin is used as a method to pay for goods or services. “Some other financial products that are associated with digital currency, such as contracts for difference over Bitcoins, are also products that are regulated by ASIC,” the report mentioned.
To sum up, the Bitcoin businesses that are not required to obtain licenses to conduct operations in Australia are: Exchanges that buy or sell cryptocurrencies; Digital Currency ATMs; and Wallet Services. At the same time, facilities that may be financial products are digital currency derivatives, as well as facilities for paying goods and services.
You can read the entire report here.
To contact the reporter of the story: Yashu Gola at email@example.com