Cryptocurrencies in, then out of, new draft legislation restricting payments by cash

Last week, the Australian Government released its exposure draft of the Currency (Restrictions on the Use of Cash) Bill 2019 (Bill) for public consultation. While the draft Bill currently captures digital currencies by default, the Government intends to provide relief from application for digital currency.

Given that the crypto-asset industry is experiencing rapid change and development, the relief is subject to repeal or modification at any time. All those who trade, or have an interest, in crypto-assets should be aware of the new law and its potential impact.

Key changes

The Final Report of the Black Economy Taskforce recommended the Government introduce a $10,000 cash payment limit for transactions between businesses and individuals.

In its response to the Report in the 2018-19 Budget, the Government announced that it would introduce a cash payment limit for such transactions with effect from 1 July 2019. This was recently extended to 1 January 2020 in the 2018-19 Mid-Year Economic and Fiscal Outlook.

The Bill will implement an economy-wide cash payment limit of $10,000, effective from 1 January 2020 for most entities, and from 1 January 2021 for certain AUSTRAC-reporting entities.

The stated purpose of the Bill is to ensure that entities cannot make unrecorded payments, reducing their ability to participate in the black economy and undertake related illicit activities such as money laundering.

However, the draft Bill is consistent with IMF blogs and papers on implementing negative interest rates in a low interest rate environment when a recession occurs. Negative interest rates are most effective in a cashless or reduced cash economy.

In a cashless world, there would be no lower bound on interest rates. A central bank could reduce the policy rate from, say, 2 percent to minus 4 percent to counter a severe recession. The interest rate cut would transmit to bank deposits, loans, and bonds. Without cash, depositors would have to pay the negative interest rate to keep their money with the bank, making consumption and investment more attractive. This would jolt lending, boost demand, and stimulate the economy.

When cash is available, however, cutting rates significantly into negative territory becomes impossible.1

The Bill creates new offences for entities that make or accept payments that include a cash payment that totals $10,000 or more.[2] This $10,000 threshold applies to the total price of a single supply of goods and services, including where that total is split into a series of payments. Breaching the provisions can attract maximum penalties of up to $25,200, and/or two years’ imprisonment.

Carve-out for cryptocurrency

‘Cash’ is defined in section 6 of the Bill as meaning both digital and physical currency. The Bill’s Explanatory Memorandum notes that digital currency is included as:

‘some forms of electronic payment more closely mirror physical currency. In particular, 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.’

However, subsections 10(5) and 11(3) of the Bill state that the offences for breaching the cash payment limit do not apply to payments of a kind or in circumstances as are specified by the Treasurer by legislative instrument. Under the draft Currency (Restrictions on the Use of Cash—Excepted Transactions) Instrument 2019 (Instrument), digital currency is marked as an exempted form of payments.

The Instrument’s Explanatory Memorandum states that the relief reflects the Government’s recognition of both the difficulties of imposing the limit on the digital currency industry in a way that will not stifle the industry, as well as the lack of clear evidence that digital currency is presently being used in Australia to facilitate black economy activity.


The relief for digital currencies from the Bill is welcome news, and, together with the amended INFO 225 (which you can read about here) released earlier this year, reflects the Government’s ongoing recognition that the crypto-asset space is a fast evolving industry which is particularly vulnerable to over-regulation.

However, parties trading in cryptocurrency should be aware that the relief is provided through legislative instrument only. This is effectively a ‘weak’ form of exemption that is subject to change at any time, without Parliament’s approval. If the Government’s current stance that cryptocurrency is not integral in the black economy changes, those who trade in cryptocurrency could suddenly find themselves caught by the operation of the Act, and exposed to potential criminal liability. Careful attention should be paid to the ongoing shifting regulatory climate relating to crypto-assets.

This article was written with the assistance of Harvey Duckett, Lawyer.

1 See also Enabling Deep Negative Rates to Fight Recessions: A Guide
2Currency (Restrictions on the Use of Cash) Bill 2019 ss 10, 11


John Bassilios

John Bassilios

Partner & Fintech and Blockchain Lead

John has broad experience in financial services, funds management, blockchain, crypto, web3 and corporate law.

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