For the information below, these are just my opinions. You should consult a lawyer for an official interpretation of Australian law.
I was double-checking the laws regarding bitcoin and the running of BitPiggy in Australia (and curious how they may affect my other business BitPiggy Platform in Hong Kong), by reading through parts of the Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Act 2006, and specifically the definition of e-currency (definition in section 5). I find the definition pretty ironic, for a couple of reasons.
To begin with, one of the key requirements for a digital currency to be considered an e-currency for the purposes of the act, that currency must be backed by something. One of the ongoing arguments about bitcoin is whether or not bitcoin will fail because it is not backed by anything. The irony is this property of bitcoin means it is not classed as an e-currency by Australian law, and thus this argued weakness of bitcoin leads to bitcoin not being burdened by AML/CTF reporting requirements - which is great for the Australian bitcoin community. This definition of e-currency is even explicitly highlighted in a 2012 AUSTRAC report (top of page 17) as limiting the government’s ability to observe bitcoin.
But beyond that, I find the definition ironic more so for another reason. There is another definition in the act, that in combination with the definition for e-currency is pretty revealing.
A key part of the AML/CTF act is the definition of money. Basically the definition for “money” is Australian dollars, other fiat currencies, and e-currencies (with the latter required to be backed by something).
But why state that e-currencies must be backed by something? If you think about why the definition is worded that way, it was likely to avoid having the AML/CTF act impose reporting requirements across whole sections of the IT industry by only targeting businesses that deal with something that is money-like. In other words, besides the explicit exceptions about fiat currencies, the act is implicitly saying AUSTRAC thinks for a money to be of interest to them, that money needs to be backed by something. To put it another way, bitcoin is not consider money because it is too little like gold and too much like fiat!
And I find that pretty ironic.
Note: Another thing of interest in the definition of e-currency is that only very specific precious metals can elevate a digital currency to official e-currency status, such as gold/silver. For instance, copper is not one of them. Hence someone could make a bitcoin-like digital currency, back it with copper, and it would not fall under the AML/CTF laws.
Or you could back it with CPU processing time. Make something called “amacoin”, where 1 amacoin entitles the owner to 1 hour of processing on an Amazon EC2 “large” instance.
Something to think about.