What Are The Pros And Cons Of Owning Cryptocurrency?

  • 26 August 2025
  • 2 min read
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Owning cryptocurrency offers high potential returns and increased financial control, but it also comes with significant risks like volatility, complex taxation, and regulatory uncertainties. Australian consumers should weigh these benefits and drawbacks, paying close attention to tax obligations and the legal environment.

Advantages of Owning Cryptocurrency in Australia

  • Potential for High Returns: Cryptocurrencies have delivered outsized returns to some investors, benefiting from market growth and increased adoption.

  • Decentralisation: Digital assets operate independently of traditional banks and central authorities, offering Australians more autonomy and control over their money.

  • 24/7 Market Access: Unlike the stock market, crypto markets never close, enabling users to trade at any time of day or night.

  • Privacy and Security: Self-custody with secure wallets can give users direct ownership of assets, reducing risks associated with exchange failures if handled correctly.

Disadvantages of Owning Cryptocurrency in Australia

  • High Volatility: Prices can swing dramatically over short periods, leading to potential losses as well as gains.

  • Security Risks: Digital assets remain susceptible to cyberattacks, hacking, and scams. Recent incidents, like Australian exchange security breaches, highlight these real risks for everyday users.

  • Regulatory Risks: The legal and regulatory framework is still developing, with changes anticipated in coming years, especially concerning licensing and consumer protection.

  • Tax Complexity: The Australian Taxation Office (ATO) treats crypto as property, subjecting capital gains or income tax depending on usage. Tax rates can be as high as 45%, and all trades must be carefully recorded and reported, even when swapping between digital assets.

  • No Legal Tender Status: Crypto is legal in Australia but not considered legal tender, so there is no obligation for Australian businesses to accept it as payment.

Regulatory Environment and Consumer Protection

  • Legality and Oversight: Owning and trading cryptocurrency is legal in Australia, but it operates under existing financial and anti-money laundering laws, enforced by agencies such as ASIC, the Australian Taxation Office, and AUSTRAC.

  • Consumer Law: Information provided to consumers must not be misleading, aligning with broader Australian consumer law. Exchanges must register with AUSTRAC and are subject to strict reporting requirements.

  • Taxation Rules: Profits from selling, swapping, or spending cryptocurrency are subject to Capital Gains Tax, with potential discounts for assets held over twelve months. If using crypto for business or trading, income tax may apply instead.

Considerations Before Investing

Australian consumers interested in crypto should:

  • Keep detailed records of all crypto transactions for tax compliance.

  • Use reputable, regulated platforms and consider hardware wallets for enhanced security.
  • Stay updated on evolving regulations and future government reforms.

Cryptocurrency provides Australians with unique investment opportunities and independent financial control, but comes with major risks, regulatory and tax burdens, and requires a careful, well-informed approach.