The simple answer is that they aren’t, outside the confines of blockchain technology, which we’ll come to later.
Even more fundamentally, the current legal status of cryptocurrencies varies considerably from one country to another. While the use of cryptocurrencies is unfettered within the European Union, specific countries, such as Turkey, have banned the payments made in cryptocurrencies.
In Australia, cryptocurrency is legal but largely unregulated. Many crypto-assets and other digital assets are commonly not considered to be financial products so the platforms where you buy and sell crypto may not be regulated by the corporate regulator, the Australian Securities and Investment Commission (ASIC).
The Australian Prudential Regulation Authority (APRA), which regulates the financial services industry, has plans for a policy roadmap for financial entities engaging in crypto activity. A draft standard is expected in late 2022. However, APRA has been keen to point out that it will not strangle innovation, with chairman Wayne Byres stating in a speech reported by The Australian Financial Review newspaper: “Much like our approach to climate risk, its underlying message is primarily one of ‘by all means innovate, but proceed with care and in full knowledge of the risks.”
Australia’s Board of Taxation is also developing a policy framework for the taxation of transactions and assets involving cryptocurrency.
Consumer group, CHOICE, meanwhile, continues to rally for better protections for consumers, some of whom have lost vast sums in crypto scams or through market volatility.
“As it stands, enforceable protections in the unregulated cryptocurrency market are somewhere between negligible and non-existent,” CHOICE states.
“In a submission to the federal government, CHOICE is calling for a regulatory regime to help put an end to consumer harm.