Australia’s War on Cash Intensifies – Is Cryptocurrency the Next Target?

The Coalition government’s recent introduction of the Currency (Restrictions on the Use of Cash) Bill 2019 continues to spark outrage across Australia. The proposed law seeks to limit the use of cash to $10,000 for payments made or accepted by Australian businesses for goods and services, with penalties for breaching the limit potentially including two-year prison sentences and fines of up to $25,000.

According to a September 4 media release by independent political party Citizens Electoral Council (CEC), “a Treasury source has revealed that the Black Economy Division received “4,000-plus” submissions against the exposure draft,” the consultation process for which concluded on August 12. “This is massive,” the CEC declared, “on average, a typical Treasury legislation consultation gets 30 submissions.”

The significant amount of opposition to the Coalition government’s bill has also been expressed by way of a petition—Stop Scott Morrison from banning cash to trap Australians in banks!—launched by the CEC on August 20. Three weeks on, the petition has attracted more than 15,000 signatures.

Considerably helping garner awareness of the Australian government’s attempt to reduce cash transaction limits has been CEC Research Director Robert Barwick. On August 29, he called in to leading commercial radio station 2GB to explain to host Alan Jones the worrying number of implications that a cash ban would bring. Days later, Barwick was invited on to 2GB’s George and Paul morning program to elaborate further. “George and Paul already understood that the ulterior motive for the cash ban was trapping bank customers in negative interest rates and bail-in,” the CEC noted in its release.

To be sure, the controversy surrounding the bill is not so much about the dollar figure nor its initial implications—exemptions are included for individuals withdrawing from or depositing into their bank accounts, foreign currency exchanges, and consumer-to-consumer transactions—as it is the wording of the bill. “If the cash ban is enacted, the government clearly intends more restrictions, as the law has been drafted in so that the exemptions to the ban…can be removed by the Minister at any time,” Barwick explains on the web page of the CEC’s petition.

Some have reason to believe that even cryptocurrencies may fall under the scope of this proposed law at some stage. As reported by the Australian Financial Review (AFR) on August 21, the main opposition party in the Australian Labor Party (ALP) has resolved to support the bill. Speaking to the AFR, Shadow Assistant Treasurer Stephen Jones shared his belief that cryptocurrencies ought to be treated the same as cash for the purpose of the bill. “If the motivation is genuinely looking at addressing fraud, tax avoidance, terrorism, and criminal activities then we should look at all of the currencies that are likely to be subject of that,” he said.

As it currently stands, cryptocurrency is not impacted by the bill. Page six of the exposure draft’s explanatory materials states: “Digital currency is a new and developing area in the Australian economy. Unlike physical currency, it does not have a firmly established regulatory framework or industry structure. This makes it difficult to apply the cash payment limit in a way that would not largely prevent the use of digital currency in Australia or significantly stifle innovation in the sector.”

“At the same time,” it continues, “there is little current evidence that digital currency is presently being used in Australia to facilitate black economy activities. Given this, the Government has decided at the present time to effectively carve digital currency out from the cash payment limit.”

Worth highlighting, however, the memorandum later states that “this position will remain under ongoing scrutiny to ensure that the exemption for digital currency payments remains appropriate in light of the current use of digital currency in the Australian economy.”

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