Cryptocurrency Law (AU) glossary
Crypto regulation in Australia sits at the intersection of AUSTRAC (AML/CTF), the ATO (CGT and income tax), ASIC (financial product rules), and the Treasury's token mapping work. This glossary covers 40 terms lawyers meet when advising on DCEs, token issuances, DAOs, and crypto disputes.
This is a glossary of 40 terms that appear in Australian cryptocurrency and digital asset practice — covering AUSTRAC registration, ATO tax treatment, Corporations Act token classification, and the evolving AFSL licensing overlay.
Definitions
Airdrop
A free distribution of tokens, often used for marketing. Generally ordinary income for recipients under ATO guidance when received.
AML/CTF Act
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth), applied to DCEs providing designated services.
ATO
Australian Taxation Office — responsible for guidance and enforcement on tax treatment of crypto.
AUSTRAC
The Australian Transaction Reports and Analysis Centre — the AML/CTF regulator, maintaining the DCE register.
Blockchain
A distributed ledger maintained across a network, underpinning most crypto assets. Design choices affect legal characterisation.
CGT asset (crypto)
The ATO's characterisation of most crypto holdings — disposal triggers a CGT event, including crypto-to-crypto swaps.
CGT event A1
The most common CGT event — disposal of a CGT asset, including crypto-to-fiat and crypto-to-crypto exchanges.
CoinJoin / mixing
Techniques to obscure transaction history. High AML/CTF risk and scrutinised by AUSTRAC.
Custody
Holding crypto on behalf of clients. May constitute a financial service depending on the asset and structure.
DAO (Decentralised Autonomous Organisation)
A governance structure using smart contracts. Legal characterisation (partnership, unincorporated association, or other) is unsettled in Australia.
DCE registration
Registration with AUSTRAC required to operate a digital currency exchange in Australia, with ongoing AML/CTF program obligations.
Digital currency (AUSTRAC)
The AML/CTF Act term covering convertible crypto-assets used as a payment means. Does not include in-game currencies.
Distributed ledger
A shared, synchronised database across multiple nodes. Technology-agnostic alternative to blockchain.
Financial product
A Corporations Act concept — token-by-token analysis determines if crypto is a financial product, triggering AFSL requirements.
Fungible token
An interchangeable token (e.g. ERC-20). Characterisation depends on rights attached, not technical form.
Hard fork
A protocol change creating a divergent chain. ATO treats new coins received from a fork as acquired at nil cost base.
Hosted wallet
A wallet where private keys are held by a third party. Raises custody and AML/CTF risk.
ICO (Initial Coin Offering)
A token issuance to raise funds. Legal characterisation depends on whether the token is a financial product.
KYC
Know-your-customer — the identity verification process required under the AML/CTF Act for designated services.
Managed investment scheme
A Corporations Act scheme that some crypto funds may fall within, triggering registration and AFSL requirements.
Mining income
Block rewards received for validating transactions. Treated as ordinary income by the ATO when received.
NFT (Non-fungible token)
A unique digital token. Tax and regulatory characterisation depends on rights, use case, and issuer structure.
Node
A participant in a blockchain network running the protocol. Operator obligations are emerging in some schemes.
Non-cash payment facility
A Corporations Act category capturing arrangements for non-cash payments. Some crypto payment products fall within.
Personal use asset
A CGT category that can exempt small-dollar, non-investment crypto. Narrow interpretation by ATO.
Private key
The cryptographic secret controlling a wallet. Custody of keys drives legal characterisation of custody services.
Proof of stake
A consensus mechanism where validators lock tokens. Staking rewards are ordinary income on receipt (ATO).
Record-keeping (crypto)
ATO expectations for maintaining records of each transaction, including date, value, purpose, and counterparty.
Self-custody wallet
A wallet where the user controls their own private keys. Different AML/CTF, custody, and insurance risk profile than hosted wallets.
Smart contract
Self-executing code on a blockchain. Raises contract formation, liability, and unconscionability questions.
Stablecoin
A token pegged to another asset (typically AUD/USD). Regulatory classification depends on mechanism and reserve structure.
Staking income
Rewards for staking tokens to validate transactions. Ordinary income on receipt; later disposal triggers CGT.
Threshold Transaction Report (TTR)
A report lodged with AUSTRAC for physical cash transactions at or above A$10,000, also applying to some digital currency equivalents.
Token classification
The analysis of whether a token is a financial product, consumer product, or payment instrument. Drives licensing obligations.
Tracing (crypto)
Following crypto on-chain to identify ownership or proceeds, relevant in fraud, insolvency, and recovery cases.
Travel rule
The AUSTRAC requirement that DCEs pass originator and beneficiary information with transfers above defined thresholds.
Trust (crypto)
A common structure for crypto holdings. Raises trustee duties, beneficial ownership, and taxation issues on distributions.
Utility token
A token giving access to a service or platform — typically outside the financial product definition, but fact-sensitive.
Wash sale rule
The ATO's general anti-avoidance position on disposals and immediate reacquisitions of the same asset for tax purposes.
Whitepaper
The descriptive document issued with token launches. Not a prospectus but treated by ASIC as relevant to misleading conduct analysis.
Research these terms in context
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These definitions are general explanations for educational purposes — not legal advice. Crypto law in Australia is developing rapidly. Always verify against the current Act, rules, ASIC information sheets, and ATO guidance before advising on a transaction.
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