A Victorian court decision has opened the door for hundreds of millions of dollars in cryptocurrency tax refunds, as Australia simultaneously moves to tighten regulation of the digital asset sector. The ruling, which classified Bitcoin as currency rather than property, could force the Australian Taxation Office to reconsider its approach to taxing cryptocurrency transactions and potentially refund up to $640 million in capital gains tax already collected.
The tax debate comes as Australia’s interest in cryptocurrency has grown significantly in recent years, with many Australians turning to Bitcoin and other digital assets. A 2025 survey by Independent Reserve found that just over 32% of Australians have owned or currently own crypto. Bitcoin remains the dominant cryptocurrency, held by about 70% of local crypto investors.
This enthusiasm for digital assets is also supported by various industries, from property purchases to online entertainment. For example, online casinos were among the earliest adopters of crypto, integrating blockchain to increase transparency and security. Bitcoin accounts for nearly for roughly 73% to 75% of all crypto gambling transactions. Ethereum follows distantly, with about 9-14% market share. Today, several online gambling sites now offer exclusive crypto poker rooms, fast withdrawal features, and a level of transparency that ensures funds are secure and visible on the blockchain (source: coinpokeraustralia.com). Crypto property purchases aren’t quite as big in Australia as in some other countries yet, but an Australian couple made the news earlier this year when selling their land in a Bitcoin-only sale, for an undisclosed amount.
The tax ruling didn’t come directly from crypto’s increased use in sectors like these, and was centred around William Wheatley’s case, a former federal police officer accused of stealing Bitcoin in 2019. In a surprise move, the Victorian judge ruled that Bitcoin should be treated as money, not property, under Australian law.
Tax lawyer Adrian Cartland said the decision could fundamentally change the ATO’s current stance if upheld in future cases. He adds that is Bitcoin is recognised as an official currency, there would be no capital gains tax to pay when Bitcoin is bought or sold.
However, tax and legal experts are urging caution. Joni Pirovich, who heads Blockchain & Digital Assets Services and Law, warned that the criminal case does not automatically change how the ATO treats Bitcoin for taxation purposes. She warns investors shouldn’t assume it will immediately change their tax obligations. The ATO has indicated it will continue treating Bitcoin as an asset for tax reporting purposes, at least for now.
While the tax question remains unresolved, the federal government is pressing ahead with plans to strengthen oversight of the cryptocurrency sector. New measures under consideration would bring exchanges, custody providers, and brokers under the same regulatory framework that governs traditional financial services. These businesses would be required to hold licences and meet strict financial standards, though smaller firms and software developers would be exempt.
The government is also developing regulations for stablecoins, treating them similarly to electronic funds with requirements around capital backing and consumer protection. The approach aims to align Australia with global regulatory standards.
Another priority for regulators is addressing the so-called ‘de-banking’ problem, where traditional banks terminate services to cryptocurrency companies. The government has committed to ensuring fair treatment for legitimate crypto businesses, following recommendations from financial regulators.
The regulatory push reflects Australia’s broader strategy to balance innovation, consumer protection and financial stability measures, which will change the crypto industry’s future in Australia.
