In brief - A wind of change for the regulation of digital currencies may soon arrive

Australian Treasury recently consulted on a regulatory framework to effectively make mandatory electronic payments or payment by cheque for transactions exceeding AUD$10,000. This follows a recommendation in the Black Economy Taskforce's final report that the Government introduce a $10,000 cash payment limit for transactions between businesses and individuals. If the Currency (Restrictions on the use of cash) Bill 2019 becomes law, the cash payment limit will start on 1 January 2020 and for certain AUSTRAC reporting entities from 1 January 2021.

In the 2018-19 Budget, the Government stated that it would introduce an economy-wide cash payment limit of $10,000 for payments made or accepted by businesses for goods and services. Transactions equal to, or in excess of this amount would need to be made using the electronic payment system or by cheque. If the new law is implemented:

  • new technology providers in the financial services sector may require significant changes to business as usual

  • business operators in non-technology sectors will also need to comply 

  • payment technology platforms that utilise banking infrastructure are likely to be at an advantage

How will digital currencies be affected by the proposed cash payment limit legislation?

The draft explanatory memorandum explains that cash (payment) is increasingly being replaced with various forms of electronic non-cash payments, typically debt or credit arrangements facilitated by banks and other payment system providers. These alternative forms of payment are more convenient and typically create records of transaction.

Other electronic forms of payment, particularly in the form of new technologies, are clearly a concern for the Government: 

  • The draft explanatory memorandum notes that cryptocurrencies and other digital currencies are generally unregulated and do not create clear records of transactions in a form that can easily be used to identify the parties to a transaction. 

  • Under the proposed framework, "cash" includes digital currency and is defined by reference to the definition in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth). This is a clear intention by the Government for cryptocurrency and other digital currencies to be captured by the proposed framework.

Minister will have power to specify which transactions may be excluded

The regulatory framework for the restrictions on the use of cash applies by casting a broad prohibition on "cash" payments and then providing power to the Minister to specify transactions for which the prohibition does not apply. The framework also applies to a series of transactions, liability is on a strict basis and criminal sanctions apply. 

Broadly, under the framework, it is proposed that the Minister will specify exclusions from the prohibition for all cash deposits and withdrawals from a bank account with an authorised deposit-taking institution (ADI), exchanging foreign currency, circumstances where an AML/CTF entity is required to provide a threshold transaction report under the Anti-Money Laundering and Counter-Terrorism Financing Act, and all personal or private (consumer-to-consumer) transactions such as selling a second-hand car but excluding real property transactions.

Update - draft rules released

On 25 October 2019, Treasury released draft rules setting out what payments will be exempted from the restriction on cash payments

The explanatory statement explains them as follows (with our comments added):

  • payments related to personal or private transactions (other than transactions involving real property) [ie no supply or acquisition in the bundle can be made in the course or furtherance of carrying on an enterprise]
  • payments that must be reported by an entity under anti-money laundering and counter-terrorism legislation, provided, broadly, the entity with a reporting obligation complies (or is reasonably expected to comply) with their obligations under that legislation [ie if someone will engage in an AML/CTF threshold transactions, the transaction can go through as long as it is reported by the designated service provider, presumably the chance to detect crime by allowing the cash transaction outweighs the aim of the new restriction]
  • payments made or accepted by a public official in the course of their duties where it is necessary for the payment to be made in cash for the performance of those duties and payments made or accepted by Australian government agencies where the payment is foreign currency produced for a foreign government [eg payments made by undercover police, but note that this exemption does not apply where the payment is to repay a debt to an Australian government entity, in which case payments in cash of over $10,000 are not permitted]
  • payments that only equal or exceed the cash payment limit because the payment is part of a transaction involving collecting, holding or delivering cash and this is undertaken in the course of an enterprise of collecting or delivering cash (ie, providing cash-in-transit services) [strictly delivery of cash as a thing is not a payment, but we understand why the rule is required as otherwise the prohibition on would unintentionally catch too many transactions)
  • payments that only equal or exceed the cash payment limit because payment is or includes an amount of digital currency
  • payments that occur in exceptional situations where no alternative method of payment could reasonably be used. 


This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2024.

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