Australia is a modern country with a solid economy and a reasonable growth rate. It is ranked only 52nd in terms of population size, but 12th in terms of Gross Domestic Product indicating the strength of the economy. However, it also has free markets dominated by enormous companies, and some crazy tax laws which seem to be restricting the adoption of bitcoin.
Telecommunications in the country is dominated by a single company called Telstra, which has little competition and seems to charge whatever it likes for services. Although not a barrier to bitcoin, it does demonstrate the problem with company monopolies. However, a bigger problem for bitcoin is that the banking sector is dominated by four big banks, and companies that use bitcoin are taxed twice on every transaction.
However, this looks set to change with the Australian Government announcing today a shake-up of laws involving digital currencies which will see the end of ‘double-taxing’. This was part of a release from the Government in an attempt to facilitate further development and use of digital currencies. It also outlined concessional tax treatment for financial tech start-ups, as well as reform to laws around crowd-funding.
Now for the big problem… I mentioned the dominance of the big four banks, well, you could also call it a strangle-hold. Whether or not bitcoin is a threat to them is speculative, but there is evidence to suggest that they are restricting funding to bitcoin companies, as almost every bitcoin related company had funding removed by one of the big banks last year.
Early this year, the consumer watchdog (aka ACCC) concluded that the banks had done nothing wrong in this matter, indicating that they all made their decisions independently and at different times. This is not the first time the banks have been accused of collusion, and probably won’t be the last. Although they are four separate entities, they always seem to follow each other. The classic example is that if one raises lending interest rates, the other three will follow within a few days. As an Australian, you just can’t escape them.
Despite this, one area where there has been some progress is International money transfers. Using any of the big four banks can see around 10-20% of the transaction value gone in fees. Local money transfer giant Ozforex, as well as a number of offshore options like World’s First and HiFX have slowly been eating into the International currency transfer market. Obviously, this is an area bitcoin is well suited to.
As many users of bitcoin already know, fees to use bitcoin are significantly lower than any financial institution, so even if the banks destroy bitcoin, hopefully all the buzz about bitcoin and blockchain technology will prompt the banks to address the fee issue, and start making some changes there. We can only hope.
In any case, some progress has been made in Australia, but the outlook still looks a little bleak for bitcoin. I think this is probably more of a case of “old habits die hard” than obstruction of bitcoin by the big banks or regulation issues. So, hopefully the reform of taxation as announced today is one more small step in the right direction for widespread use of bitcoin and digital currencies in Australia.
Only time will tell.