Data61, Treasury scruitinse blockchain's potential

Review comes as government moves to change tax treatment of bitcoin

The CSIRO’s Data61 will lead a review into the potential of technology based on blockchain, the distributed ledger that underpins bitcoin-style digital currencies.

Data61 will collaborate with government agencies including the Treasury, the organisation, which was formed out of a fusion of the CSIRO’s digital productivity group and NICTA, said in a statement.

The review will include assessing the potential benefits for Australia and the skills necessary to harness the technology in order for the country to become a global leader in the area, as well any legislative implications.

“We will be seeking to identify what the future will hold for blockchain in this country and the impact it is likely to have on Australia over the next two decades,” said Stefan Hajkowicz from Data61’s Foresighting Team.

The work will be run by Data61’s blockchain research team, which is led by Liming Zhu and Mark Staples.

A number of proof of concept projects will be undertaken as part of the review.

“There are currently a few potential areas where we could explore opportunities – such as sharable registry information, verifiable supply chains and assessment of aggregate risk exposure in the financial services sector,” Hajkowicz said in a statement.

“In fact, there are also potential applications for this technology that extend well beyond the financial industry, and we are excited to explore, develop and apply the technology in both financial and non-financial industry, in consultation with industry and government.”

The announcement of the review comes in the wake of Treasury’s release of a discussion paper on options for changing the GST treatment of bitcoin and other digital currencies.

Currently, the GST treatment of bitcoin involves a form of ‘double taxation’, which bitcoin advocates have said acts as a fetter on the growth of businesses based on the digital currency. The tax treatment is due to the Australian Taxation Office assessing transactions using bitcoin as being more akin to barter than a typical purchase using a currency.

The government has said it will change the rules governing the treatment of bitcoin and other digital currencies to remove the double taxation burden.

The Treasury discussion paper canvases issues including how to identify a digital currency in regulation so that “internet-based currency-like products” — such as loyalty points — aren’t accidentally captured.

The recently review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 called for changes to the treatment of digital currencies, warning that they fall outside of Australia’s current AML/CTF regime.

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