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Authors

Russ Marshall

Abstract

There are over 275 virtual currencies in existence today. One of these currencies is Bitcoin, the largest and most recognised virtual currency in the world. With its exponential growth over recent years, Bitcoin is bringing a degree of permanence for, and dependability on virtual currencies that can no longer be ignored by regulators. While an increase in international regulatory activity over the past 12 months suggests that some governments understand this, Australian regulators appear reluctant to act. In addition to examining Bitcoin’s operational system in detail, this article examines the affect that Bitcoin is having on two key features of the financial system: (1) the money laundering and illicit finance supply system; and (2) the payment system. By comparing the effectiveness of the response measures enacted by Australian and international regulators in Canada, Singapore, the United States, and the United Kingdom, this article demonstrates that even though Australia’s current payment system policy is capable of addressing the threats posed by virtual currencies, the current money laundering and terrorist financing regulations fail to satisfy Australia’s international obligations, and stifle the legitimate use and development of virtual currencies in Australia.

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