Could Crypto Wagering Be Coming to Australia’s Regulated Gambling Industry?

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Wagering in cryptocurrency might join the realm of legally sanctioned gambling if reports of discussions between the Northern Territory Racing Commission (NTRC) of Australia and gaming enterprises and license holders are true. The deadline for interested parties to submit their comments to the regulator is September 29.

The NTRC recently sent a piece of correspondence to all of the gaming companies that have valid licenses as part of their ongoing efforts. These gaming companies include well-known international gambling businesses like Betfair, Entain Group, and Draft Kings, among others.

The paper requests their comments on the viability of cryptocurrencies being used in gaming in the Northern Territory. In addition, licensees are asked for their input on the paper on the kind of legislative and industry reforms that would be necessary to make this a reality.

“What it provides for is a licensee, say a sports bookmaker who holds a license in the Northern Territory, who wants to accept cryptocurrency for striking or paying out wages, [is that they] need to apply for consent to be able to do that. And there’s certain conditions that attach to that.”

~ Julian Hoskins, the principal of Senet, one of Australia’s major gambling law and regulatory advisory firms.

At least for the time being, gamblers using one platform will have to make separate wagers in fiat currency and cryptocurrencies. This is because these two forms of currency won’t be able to be exchanged for one another while gaming.

The Tax and Legal Implications

According to sources close to these initiatives, the NTRC is also mulling over the subject of the tax implications of utilizing cryptocurrencies for gaming purposes. It will take a bit of time to understand the full scope of that but there are certainly a lot of potential solutions.

Nevertheless, the use of cryptocurrency in gaming would first need jumping over several legal hoops, such as adhering to strict identification criteria to comply with Anti-Money Laundering (AML) legislation. It is quite probable that gamblers will be required to have the addresses of their cryptocurrency wallets validated, and winnings will have to be withdrawn to the same wallet that was used to make the original deposit.

As is standard procedure in gaming that is based on fiat currency, local gambling enterprises will be legally obligated to have cryptocurrency wallets that store sufficient cash to adequately collateralize the wager amounts of their customers.

Australian Tax Office Hunts for Crypto Tax Evaders

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If you are a holder of crypto and a citizen of Australia or are currently residing in the country you had better be on the good books of the national tax agency. The Australian Tax Office through an April 30 press release announced that it has started collecting bulk record from Australian-designated service providers such as digital currency exchanges and other firms that are dealing in crypto.

As it stands the tax office is working with a wide estimate of 500,000 to one million Australians who have been trading in crypto-related activities and ignoring their tax obligations. The number of crypto users on Australia has been growing at a rather rapid rate and this has caught the attention of the authorities who are hopeful that the industry might help in filling some of the existing tax gaps.

Unsurprisingly, the authority’s aim is to carry on a data matching program that will help them to determine whether the taxpayer’s declarations are correct or if the crypto holders are deliberately dodging their fiscal responsibilities.

“The ATO uses third-party data to improve the integrity of the tax system by identifying taxpayers who fail to disclose their income details correctly. We also use third-party data to assist taxpayers in meeting their tax obligations through pre-filling of tax returns. This data will be collected under notice from the DSPs on an ongoing basis,” Will Day, deputy commissioner of the ATO said about the strategy.

Some of the information that the tax authority will be obtaining from the crypto-related business in the country will include purchase and sale records. Fortunately for them, Australian required businesses to keep certain critical records that include digital wallet records and keys, receipts of transfer or purchase of crypto assets as well as exchange records.

All of the taxpayers who will be found to have violated the law will first be contacted by the tax agency once the exercise is complete after which the necessary compliance action will be taken.

Crypto Tax Laws in Australia

Under Australian law, all capital gains that may be obtained from crypto trading are supposed to be taxed. The only exception is where the capital gains or the losses made are in a situation where the digital currency is a “personal use asset”. As such, in cases where digital currencies are disposed as a normal business operation, the profits that are yielded from it are considered to be ordinary income instead of capital gains. Moreover, in such a case the cost of purchasing the cryptocurrencies is considered to be trading stock and is therefore deductible – this kind of businesses are mostly trading firms and exchanges.