AUSTRALIA Law and Practice Contributed by: Steven Pettigrove, Katrina Sharman, Luke Higgins and William Deeb, Piper Alderman
1.2.2 Access to Banking There are no explicit restrictions on the banking part- ners that digital asset businesses may use for general banking and payment services, nor formal prohibitions on access to those services (subject to standard risk based AML/CTF assessments by financial institu- tions); however, industry participants in Australia have reported ongoing de banking challenges. Financial institutions have, in some cases, restricted or with- drawn services from crypto businesses despite strong growth in user adoption, creating a structural disad- vantage for local exchanges. Looking ahead, the DAF Act will introduce Digital Asset Platform and Tokenised Custody Platform licensing authorisations from 8 April 2027. It is hoped that the resulting increase in regulatory clarity will assist in strengthening relationships within the banking sector. 1.2.3 ESG/Sustainable Finance The Australian government has not enacted any spe- cific laws or regulations addressing the environmental impacts of blockchain technology, including proof-of- work systems. However, a number of companies are continuing to explore the use of blockchain in environ- mental applications, such as biodiversity credit initia- tives, to support the achievement of environmental objectives. If a digital asset business falls within Chapter 2M of the Corporations Act, it will be subject to mandatory climate related financial disclosure requirements. 1.2.4 Tax Significant tax uncertainties remain in Australia, including, but not limited to: • capital versus revenue account characterisations for individual investors/traders; • the applicability of Fringe Benefits Tax (FBT) to pro- jects that allocate tokens to their employees (akin to an employee share scheme); • the legal and tax implications of a business operat- ing through a Decentralised Autonomous Organisa- tion (DAO); • whether certain on-chain interactions (eg, staking) constitute taxable events; • the tax implications of a blockchain hard fork;
remains grounded in orthodox equitable and propri- etary remedies. Scope of Possession The DAF Act has sought to clarify the perimeters of “possession” for the purposes of financial services licensing. It defines possession by reference to fac- tual control: a person possesses a digital token if they can transfer it, exclude others from transferring it and demonstrate that capability. This approach deliber- ately contrasts with the definition of “possession” in the remainder of the Corporations Act, replacing tra- ditional legal concepts of possession with a control- based test aligned with blockchain systems, linking possession to the practical ability to control the token Transfer of ownership of crypto-assets is primarily determined by the operation of the relevant block- chain protocol. Transfers are effected through trans- actions authorised by private keys and recorded on the distributed ledger. As a result, control of the rel- evant private key is typically a key indicator of factual control over the asset. rather than to formal legal ownership. Transfer and Collateral Arrangements There is currently no specific legislative framework in Australia addressing the use of crypto-assets in col- lateral arrangements. There are a number of areas of legal uncertainty in Australia regarding the use of digital assets as collateral or security. These include: • whether crypto-assets constitute “property”; • how ownership and control of crypto-assets should be identified and evidenced; • the taxation consequences of using crypto-assets as collateral; and • the extent to which the Personal Property Securi- ties Act 2009 (Cth) applies to security arrange- ments involving crypto-assets. To date, there has been limited case law or regulatory guidance addressing these issues directly. However, given the judicial recognition of bitcoin as a form of property, crypto-assets are likely capable of form- ing the subject matter of a valid security or collateral arrangement, although the practical application of existing security law frameworks remains uncertain.
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