In recent years, cryptocurrency has grown into something massive, expanding to the point that most people have some understanding of the major cryptocurrencies. However, the industry contains countless crypto opportunities, with many looking for the next big thing. And that remains true despite the recent decline.
In fact, many still believe that the cryptocurrency market will bounce back and rise beyond its previous heights. Because of that, there are plenty of people who want to buy crypto, seeing the decline as an opportunity to get into the game at a lower price point.
If you are one of the people looking to get into cryptocurrency while prices are down, then you need to know how to buy cryptocurrency. While this article will focus on how to buy cryptocurrency in Australia, the general information will be useful for anyone looking to get started. So, if you want to know where to start, keep reading down below.
The Basics of Buying Cryptocurrency in Australia
When it comes to buying cryptocurrency in Australia, there are many things to consider, such as how you go about buying it and what your intent is. Those things matter for taxes and might inform how you go about entering the crypto game. But before all of that comes the process of actually buying crypto from an exchange or trading platform.
There are a large number of exchanges and trading platforms out there, with some dealing strictly in cryptocurrency and others spanning a wide range of investment opportunities. Each of them has its own benefits and limitations as well, which means you need to consider a few things when making your choice:
- Does it accept the fiat currency you want to buy crypto with?
- Is it a properly regulated exchange that offers a safe investment environment?
- Are there advanced trading tools?
- What are the fees involved when trading on the platform?
- Which markets does the exchange support?
Some of the above concerns are directed at advanced traders, but knowing what you need out of an exchange is vital when making your choice. There are also beginner-friendly platforms that are great for people who want to dip their toes in. Fortunately, no matter your needs, there is a suitable crypto exchange out there.
Crypto Exchanges
As mentioned above, there are many things to consider when choosing a crypto exchange, so it is worth taking the time to do some research. That is especially the case if you are new to trading and don’t know the ins and outs of trading. In fact, there are some exchanges that offer educational resources that can be extremely helpful.
Additionally, different exchanges allow you to trade different types of currency, so you will have to choose one that deals with what you want. Below, you will see a few exchanges with a good reputation for those buying cryptocurrency in Australia, including why you might consider them.
CoinSpot Exchange
Few crypto exchanges have the same reputation in Australia as CoinSpot. First and foremost, it provides features and a range of coins that makes it a great choice for any trader. That makes it a fantastic option for inexperienced traders who want to get a feel for things. And it has both desktop access and an easy-to-use app, which is nice.
Moreover, it stands out in the Australian crypto exchange market since it deals with more than 360 coins. But one of the things that really make it reliable and worth checking out is its status as a certified member of Blockchain Australia. It is even registered with ASIC and regulated by AUSTRAC, so you can trade with peace of mind.
That being said, CoinSpot does require a higher-than-average fee for instant buys at 1%, but there are other ways to trade that lower the fee considerably. Another thing to keep in mind is that it does not allow deposits with credit/debit cards.
Digital Surge Exchange
Digital Surge is another great exchange that is known for having the lowest combination of fees and spreads. That is always pleasant news, especially when you consider the fact that the exchange is built to be easy to use and beginner-friendly. Moreover, it is also registered with AUSTRAC and ASIC.
The exchange also offers crypto investment opportunities with more than 300 coins. Digital Surge even has a feature that allows you to put your various crypto investments to use, paying an Australian bill or credit card directly from your account, assuming BPAY is accepted.
eToro Australian Exchange
Another exchange that is worth taking a look at if you want to buy cryptocurrency in Australia is eToro. One of the things that makes this exchange stand out is that it makes it easy for users to copy trade. Copy-trading essentially allows users to mimic the trades of successful investors, automating the investment process to a degree.
Of course, if you want to take things into your own hands, that is also an option. Also, eToro is not simply a crypto exchange, either, offering multiple trading instruments. You can also take advantage of eToro’s demo accounts to practice trading with $100,000 in virtual currency.
While there are plenty of great things about eToro, it does have a few shortcomings. There is a currency conversion fee (USD/AUD), which might or might not be a problem for some traders. Plus, it only offers a small variety of around 50 cryptocurrencies on the platform.
Making Your First Purchase Using An Exchange
The above crypto exchanges are only a few of the options out there, but once you make a decision, the next steps are mostly similar. To begin with, you will need to create an account with the exchange you wish to use, which might require email confirmation and a cell phone number.
After settling the account, it is time to verify your identity, which is a must when buying cryptocurrency in Australia. While there might be exceptions, remaining compliant with ASIC requires exchanges to verify the identity of their users. Verification usually requires a driver’s license, though a passport might work in some instances.
Finally, you will need to deposit money into your account, and the methods available depend on the exchange. For instance, some of the possible methods include things like:
- Debit and credit cards
- Local bank transfers
- Paypal and similar apps
When you deposit money into your account, you might be subjected to fees or minimum deposit amounts, though it will depend on the exchange you use. But once you have funds in the account, you can search and buy any cryptocurrency available on the exchange. The exact process will vary, but it is unlikely to be complicated.
Buying Cryptocurrency – Trader vs. Investor
When you are first learning how to buy cryptocurrency in Australia, you will need to think about how your buying will impact your tax status. Buying crypto is easy enough once you find a good exchange, but using it to its maximum potential involves a lot of potentially complicated things. One of those is how your purchases are classified.
If you are looking to buy cryptocurrency as a long-term investment to gradually build wealth over time, you are likely to be classified as an investor. Investors buy crypto for themselves and gain returns over an extended period. You can almost think of crypto as a type of stock in this case.
Those that buy crypto to generate income actively will likely be classified as a trader. Traders operate with a business setup, doing things like regularly buying and selling for short-term gains. Essentially, if you buy cryptocurrency in Australia to earn an income, you will be considered a trader.
How Classification Impacts Taxes
If you buy cryptocurrency in a business-like manner and are classified as a trader, you will pay income tax on your earnings. You are looking to make income, so it will be treated as one.
On the other hand, investors are subject to capital gains tax, though there are cases where income tax also applies. However, investors do have the ability to only pay 50% of their capital gains tax on long-term gains. Long-term is anything held for longer than a year.
Tax on Buying Cryptocurrency In Australia
While , there might also be taxes on the act of buying itself. The Australian Taxation Office (ATO) says taxation of purchase depends on how you pay.
When you buy cryptocurrency in Australia with fiat currency, such as AUD or USD, you will not be taxed. The taxation only comes when you sell, exchange, or gift your crypto. However, buying crypto with crypto is a different matter.
The act of buying, swapping, or trading cryptocurrency for another cryptocurrency is taxable. In part, that is due to how the transaction is perceived, which is selling one crypto asset and then buying another. The sale of crypto in that exchange is taxable.
Buying Cryptocurrency As a Personal Use Asset
Cryptocurrency can also be bought and used as a personal use asset. Doing this gives you an exemption from capital gains tax. However, it requires you to buy less than $10,000 of cryptocurrency, which is then used to buy something for personal use or consumption. It must also be used within a short amount of time.
Crypto Portfolio Trackers and Tax Calculators
If you want to know how to buy cryptocurrency in Australia, then you might also want to know about useful tools that will make the journey easier. One is definitely a good crypto exchange, but there are also portfolio trackers and tax calculators, which can be a big help during the process.
A crypto portfolio tracker will manage your buy and sale dates, which will give you all of the information you need to know when it comes time to pay taxes. Meanwhile, a crypto tax calculator helps you understand how much you need to pay.
While there are plenty out there, , which actually tackles both portfolio tracking and the calculation of taxes. Therefore, as you start your journey into buying crypto, it is something worth taking a look at, especially if you want to track your purchases from the start.
Final Thoughts
Learning how to buy cryptocurrency can be a difficult process, especially if you are new to the game. Fortunately, there is plenty of educational content out there, as well as a multitude of crypto exchanges built to make the process as simple and painless as possible.
Just keep in mind that the way you buy and use your crypto impacts many things, including the type and amount of taxes you have to pay. It is also worth noting that having a portfolio tracker and looking forward when it comes to taxes can save you a lot of effort in the future. That is especially so if you are looking at things in the short term.
