Australia pushes to ban large sums of cash – what does it mean for digital currency?

While the Australian Government seeks to put a limit on cash transactions, what does it mean for the future of paper and coins? And is Australia <a href="https://www.cryptoknowmics.com/crypto/australian-parents-express-fears-over-dark-web-drug-sellers/">really ready for the introduction of cryptocurrencies</a>?

Many Australians had a very strong reaction to the news recently that the Federal Government is currently trying to pass a law that will ban cash payments for goods and services exceeding $10,000.

Illegal transactions 

If passed, the law will make cash transactions larger than $10,000 undertaken with a business illegal and <a href="https://www.sydneycriminallawyers.com.au/blog/paying-cash-you-could-end-up-in-prison/" rel="noopener">anyone who breaks the law will face large fines and potential jail time</a>.

The move by the Australian Treasury is part of a wider strategy to crack down on the country’s black economy, estimated to be worth about $50 billion, approximately 3 percent of national GDP.

And, let’s be honest, in this day and age when you can buy stuff and pay your bills via your smartphone or your wristwatch, it is getting harder to justify why anyone would want to carry around large sums of cash anyway.

What’s more, Australia not the first country in the world to put limitations on cash transactions. In fact, maximum limits on cash transactions already exist in most European countries, and the general trend is downward.

But there has been serious backlash from Australians generally. And while most are completely aware that the anonymity of cash ensures that anyone participating in the black economy can remain under the radar, outspoken opponents of the $10,000 limit say that the proposal is Orwellian in that it bans the use of legitimate currency and exposes ordinary people to criminal sanctions.

Many also argue that while cash may have traditionally been the currency of choice for illegal activity, over the past several years criminals have preferred to do their deals in cryptocurrency.

Certainly, the statistics back up that claim. Recent figures show that cybercriminals have netted $4.3 billion from digital currency exchanges, investors and users this year alone, and Bitcoin is the most used cryptocurrency for purchasing and selling of illegal drugs, weapons, as well as cyber and banking credentials.

Law makers and enforcers are on a steep learning curve 

There are now more than 1,000 cryptocurrencies and law makers and law enforcers around the globe are on a steep learning curve. Australia is no different. But in proposing the <a href="https://www.treasury.gov.au/consultation/c2019-t395788" rel="noopener">Currency (Restrictions on the use of cash) bill 2019</a>, the Australian Government excluded cryptocurrencies from the draft legislation, noting that because digital currency is new and developing and unlike physical currency, does not have a firmly established regulatory framework or industry structure, it would be difficult to apply the cash payment limit in a way that would not hinder the use of digital currency or stifle innovation in the sector.

The challenges ahead for Australia 

Internationally, Australia is seen as relatively ‘progressive’ in terms of embracing cryptocurrency, but it is not as far advanced as other jurisdictions such as Japan and Singapore.

Just last year, Australia passed and implemented new laws for digital currency exchange (DCE) providers which stipulate that any DCEs with a business operation located in the country must now register with AUSTRAC  the federal agency responsible for overseeing financial intelligence, anti-money laundering and counter-terrorism) as well as meet the Government’s compliance and reporting obligations.

Reforms and laws like these are important to both protect the sector and to strengthen public confidence. There is still widespread misunderstanding and lack of knowledge about cryptocurrencies and how they operate amongst the majority of Australians, despite the fact that there is a general awareness that cash, as it is in many countries around the world, is being phased out.

Data from Australia’s Reserve Bank shows the use of cash diminishing, with the number of cash payments almost halved between 2007 and 2016, from 69 percent to 37 percent, indicating that cash will become a niche payment option sooner rather than later.

The Reserve Bank data also shows though that the people who tend to use cash the most are those who live in regional and rural Australia (which can experience intermittent internet coverage) and the elderly and poorer members of the community who have no access to technology (phone apps or computers) and/or no knowledge of how to complete online transactions.

And herein lies the final hurdle for cryptocurrencies in the land Down Under. Australia’s vast open spaces mean that internet services in remote communities are not always immediate and reliable and yet they must absolutely be, for electronic transactions to take place anywhere, anytime, offering the exact same accessibility and convenience that cash always has.

In Australia, while the Federal Government makes moves to get tougher on cash transactions, and incentivize electronic transactions there are still other important public education, trust and readiness issues as well as infrastructure technicalities that need to be resolved before the nation can truly leave paper and coins behind.

Australia pushes to ban large sums of cash – what does it mean for digital currency?

Sonia Hickey is a freelance writer, magazine journalist and owner of 'Woman with Words'. She has a strong interest in social justice, and is a member of the Sydney Criminal Lawyers content team.

Australia pushes to ban large sums of cash – what does it mean for digital currency?

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