Reference · 51 terms · Updated June 2026
Crypto, defined in plain English
Every term an Australian investor actually meets — from seed phrases to CGT events, the sole purpose test to the travel rule. Definitions are written to stand on their own, with Australian tax and regulatory context where it changes the answer.
A
5 terms- Accumulation phase
- The stage when a super fund is building savings before retirement. An SMSF in accumulation phase pays up to 15% tax on earnings, and capital gains on crypto held for more than 12 months are effectively taxed at 10% after the one-third CGT discount. SMSF crypto guide →
- Address
- A unique string of letters and numbers identifying a destination on a blockchain — like a BSB and account number for crypto. Anyone can send funds to an address, but only the holder of the matching private key can spend them. Always verify addresses in full before sending.
- Address poisoning
- A scam where an attacker sends a tiny transaction from an address crafted to look almost identical to one you use often, hoping you later copy the lookalike from your transaction history. Defeat it by checking every character of an address before sending — not just the first and last few. Wallet security guide →
- AFSL (Australian Financial Services Licence)
- A licence issued by ASIC to businesses that provide financial services. Under the Digital Assets Framework passed in April 2026, crypto exchanges and custody providers operating digital asset platforms must hold an AFSL when the new regime commences on 9 April 2027. Is crypto legal in Australia? →
- AUSTRAC
- The Australian Transaction Reports and Analysis Centre — Australia’s financial intelligence agency and anti-money-laundering regulator. Crypto exchanges must be registered with AUSTRAC to operate legally in Australia; on 31 March 2026 existing registrants automatically became registered virtual asset service providers under the reformed AML/CTF regime. AUSTRAC-registered exchanges →
B
2 terms- Bitcoin (BTC)
- The first and largest cryptocurrency, launched in 2009 by the pseudonymous Satoshi Nakamoto. Bitcoin records transactions on a decentralised proof-of-work blockchain and has a fixed maximum supply of 21 million coins. The ATO treats bitcoin as a CGT asset, not as money or foreign currency.
- Blockchain
- A shared digital ledger that records transactions in blocks linked by cryptography and copied across thousands of computers, making the history practically impossible to alter. Blockchains let strangers transact without a bank or central authority, and they underpin every cryptocurrency from bitcoin to stablecoins.
C
5 terms- Capital gains tax (CGT)
- The tax applied to profits when you dispose of an asset. The ATO treats crypto as a CGT asset, so selling, swapping, spending or gifting coins can produce a taxable capital gain or a capital loss, reported in your annual tax return. Crypto tax guide →
- CGT discount (50%)
- A concession that halves the assessable capital gain for Australian resident individuals who hold an asset — including crypto — for at least 12 months before disposal. Complying super funds, including SMSFs, receive a one-third discount instead; companies receive no discount at all. Crypto tax guide →
- CGT event
- Any transaction that crystallises a capital gain or loss under Australian tax law. For crypto this includes selling for dollars, swapping one coin for another, spending it or giving it away. Transferring crypto between wallets you own is not a CGT event. Crypto tax guide →
- Cold storage
- Keeping the private keys to your crypto entirely offline — on a hardware wallet, an air-gapped device or a physical seed backup — so they are out of reach of online attackers. Standard practice for long-term holdings and SMSF assets. Wallet guide →
- Cost base
- What an asset cost you for capital gains tax purposes: the purchase price plus incidental costs such as brokerage and transfer fees. Your capital gain or loss equals sale proceeds minus cost base, and the ATO requires records of every acquisition for at least five years. Crypto tax calculator →
D
4 terms- DCE register
- AUSTRAC’s register of digital currency exchange providers, mandatory since 2018 for any business swapping crypto and dollars in Australia. On 31 March 2026 the regime expanded: existing DCE registrants automatically became registered virtual asset service providers (VASPs), with custody and transfer services also brought into scope. AUSTRAC-registered exchanges →
- Decentralised finance (DeFi)
- Financial services — lending, borrowing, trading, earning yield — delivered by smart contracts on public blockchains instead of banks and brokers. DeFi removes intermediaries but adds smart-contract and counterparty risk, and the ATO generally treats DeFi swaps, wraps and liquidity events as CGT events. Crypto tax guide →
- Digital Assets Framework
- Australia’s first dedicated crypto law. The Corporations Amendment (Digital Assets Framework) Act 2026 received royal assent on 8 April 2026 and commences on 9 April 2027. It makes digital asset platforms and tokenised custody platforms financial products under the Corporations Act, regulated by ASIC and requiring an AFSL. Is crypto legal in Australia? →
- Dollar-cost averaging (DCA)
- Investing a fixed amount on a fixed schedule — say $200 a fortnight — regardless of price, which smooths your average entry over time. For Australian tax purposes, each purchase sets its own cost base and starts its own 12-month clock for the CGT discount. DCA backtest calculator →
E
1 term- Exchange (digital currency exchange)
- An online platform where you buy, sell and trade cryptocurrency. Australian exchanges must be registered with AUSTRAC, and under the Digital Assets Framework most will also need an Australian Financial Services Licence from 2027. Fees, spreads and coin ranges vary widely between platforms. Compare Australian exchanges →
F
1 term- Financial Claims Scheme (FCS)
- The Australian Government guarantee protecting deposits up to $250,000 per account holder, per licensed bank, building society or credit union (as at June 2026). Crypto held on an exchange is not a deposit: if the platform collapses you are an unsecured creditor with no FCS protection. Compare Australian exchanges →
G
1 term- Gas fee
- The fee paid to a blockchain network to process a transaction or execute a smart contract, priced by computational effort and network congestion. The term comes from Ethereum but is used broadly. Gas paid when acquiring or disposing of crypto can generally be factored into CGT calculations.
H
3 terms- Halving
- A scheduled event roughly every four years that cuts the new bitcoin paid to miners in half, slowing supply growth toward the 21 million cap. The April 2024 halving reduced the block reward from 6.25 to 3.125 BTC; the next is expected around 2028.
- Hardware wallet
- A small physical device that keeps private keys offline and signs transactions inside the device itself, so the keys never touch an internet-connected computer. Removes the remote-attack surface of software wallets — though a lost seed phrase remains unrecoverable. Hardware wallet guide →
- Hot wallet
- A wallet whose private keys live on an internet-connected device — a phone app, browser extension or exchange account. Convenient for small balances and frequent transactions, but more exposed to hacking, malware and phishing than cold storage. Wallet guide →
I
2 terms- In-house asset
- Under superannuation law, a loan to, investment in or lease with a related party of the fund. In-house assets are limited to 5% of an SMSF’s total assets, and breaches must be rectified — one reason crypto arrangements involving related entities need care. SMSF rules, tax and audit →
- Investment strategy (SMSF)
- A written plan that superannuation law requires every SMSF trustee to prepare and review regularly, covering risk, return, liquidity, diversification and insurance. Crypto holdings must genuinely fit the documented strategy — the fund’s independent auditor checks this every year. SMSF crypto guide →
K
1 term- Know your customer (KYC)
- The identity checks financial businesses must complete before serving you. Under Australia’s AML/CTF Act, registered crypto exchanges must verify new customers — typically with a driver licence or passport — and monitor transactions on an ongoing basis. No legitimate Australian exchange lets you trade anonymously.
L
1 term- Limit order
- An instruction to buy or sell only at your chosen price or better. Limit orders rest in the order book until matched, so execution is not guaranteed — but you avoid slippage and usually pay the cheaper maker fee rather than the taker fee.
M
3 terms- Maker–taker fees
- A fee model where “makers” — orders that rest on the order book and add liquidity — pay lower fees than “takers”, whose orders fill immediately and remove liquidity. On most Australian platforms, patient limit orders cost meaningfully less than instant buys. Compare exchange fees →
- Market order
- An instruction to buy or sell immediately at the best price available. Market orders always execute, but the final price can differ from the one you saw — especially for large orders or thinly traded coins — a cost known as slippage.
- Multisig (multi-signature)
- A wallet that requires multiple private keys — for example, any two of three — to authorise a transaction. Multisig removes the single point of failure of one key and is commonly used for SMSF holdings, business treasuries and shared family wealth. Wallet guide →
N
1 term- Non-custodial wallet
- A wallet where you alone hold the private keys, rather than trusting an exchange or custodian to hold crypto on your behalf. Self-custody removes platform counterparty risk, but it makes you fully responsible for securing your keys and seed phrase. Wallet guide →
O
2 terms- Order book
- The live list of all open buy orders (bids) and sell orders (asks) on an exchange, arranged by price. The gap between the best bid and best ask is the spread, and a deep order book means large trades move the price less.
- Over-the-counter (OTC) trading
- Trading large amounts directly with a dealing desk at a single agreed price, rather than through a public order book. OTC desks suit six-figure-plus trades because they avoid slippage and visible market impact, offering deeper liquidity and personal settlement support. OTC trading in Australia →
P
3 terms- Pension phase
- The retirement phase of superannuation, when a fund pays an income stream to a member. Earnings on assets supporting the pension — including realised crypto gains — are tax-free, up to the transfer balance cap, provided minimum annual pension payments are met. SMSF crypto guide →
- Personal use asset
- An ATO category for crypto bought and used promptly to purchase items for personal consumption. Capital gains on personal use crypto acquired for under $10,000 are disregarded — but the ATO applies the rule narrowly, and crypto held as an investment never qualifies. Crypto tax guide →
- Private key
- The secret cryptographic number that controls the crypto at a given address — whoever knows it can spend the funds. Lose it without a backup and the crypto is unrecoverable; expose it and the crypto can be stolen. Hence the saying: not your keys, not your coins. Wallet guide →
R
1 term- Rug pull
- A scam in which developers promote a token or DeFi project, attract investor funds, then drain the liquidity and disappear. Warning signs include anonymous teams, unaudited contracts, restrictions on selling, and promised returns that look too good to be true.
S
8 terms- Seed phrase
- A list of 12 or 24 words that can regenerate every private key in a wallet. Anyone who sees your seed phrase controls your crypto — store it offline, never photograph it or type it into a website, and never share it with anyone claiming to be support staff. Wallet guide →
- Self-managed super fund (SMSF)
- A private superannuation fund with up to six members who are also its trustees, regulated by the ATO. An SMSF can legally hold crypto if the trust deed and investment strategy allow it, fund assets are kept strictly separate from personal holdings, and annual audit and valuation requirements are met. Crypto SMSF guide →
- Slippage
- The difference between the price you expect and the price your trade actually fills at, caused by thin liquidity or fast-moving markets. Slippage grows with order size — one reason larger Australian investors use OTC desks instead of market orders on retail exchanges. OTC trading in Australia →
- Smart contract
- Code stored on a blockchain that executes automatically when its conditions are met, with no intermediary required. Smart contracts power DeFi, stablecoins and NFTs. They do exactly what they are written to do — which includes faithfully executing any bugs.
- Sole purpose test
- The core SMSF rule in section 62 of the SIS Act: the fund must be maintained solely to provide retirement benefits to members. Crypto must be bought for the fund’s benefit only — any present-day personal use or benefit risks severe trustee penalties. SMSF rules, tax and audit →
- Spread
- The gap between the best buy price and the best sell price for an asset. On “instant buy” crypto platforms the spread is an invisible cost that often exceeds the advertised commission — comparing total cost, not headline fees, is what matters. Compare Australian exchanges →
- Stablecoin
- A token engineered to hold a fixed value, usually one US dollar, backed by reserves of cash and short-term assets. Stablecoins are still CGT assets in Australia — swapping bitcoin into a stablecoin is a disposal and can crystallise a taxable gain. Crypto tax guide →
- Staking
- Locking crypto to help secure a proof-of-stake blockchain in exchange for rewards. The ATO treats staking rewards as ordinary income at their market value when received, and that value then becomes the cost base for any later capital gain or loss. Crypto tax guide →
T
4 terms- Token
- A digital asset issued on an existing blockchain rather than running its own network — stablecoins and governance tokens are typical examples. By contrast, a “coin” such as bitcoin or ether is the native asset of its own blockchain, used to pay that network’s transaction fees.
- Transfer balance cap
- The lifetime limit on superannuation that can be moved into the tax-free retirement phase — $2.0 million for 2025–26, indexed to $2.1 million from 1 July 2026. Amounts above the cap remain in accumulation phase, where earnings are taxed at up to 15%. SMSF crypto guide →
- Travel rule
- An anti-money-laundering rule requiring crypto businesses to pass identifying information about the sender and recipient along with virtual asset transfers. In Australia the travel rule applies in full from 1 July 2026 under the reformed AML/CTF Act, aligning with global FATF standards. Is crypto legal in Australia? →
- Two-factor authentication (2FA)
- A second proof of identity, beyond your password, required at login — such as a code from an authenticator app or a hardware security key. Use app- or key-based 2FA on every exchange account; SMS codes are vulnerable to SIM-swap attacks.
V
1 term- Virtual asset service provider (VASP)
- A business providing crypto exchange, transfer, custody or related services. Australia’s reformed AML/CTF regime registers VASPs with AUSTRAC: existing digital currency exchange registrants converted automatically on 31 March 2026, and newly captured providers — including custody and transfer services — had until 29 July 2026 to register. AUSTRAC-registered exchanges →
W
2 terms- Wash sale
- Selling crypto to crystallise a capital loss and immediately repurchasing the same asset. The ATO has warned that wash sales are a form of tax avoidance — losses generated this way can be denied under anti-avoidance rules, and crypto’s permanent data trail makes them easy to detect. Crypto tax guide →
- Wrapped token
- A token on one blockchain that represents an asset from another — wrapped bitcoin on Ethereum, for instance — backed one-to-one by the original. ATO guidance treats wrapping and unwrapping as a CGT event, because one CGT asset is exchanged for another. Crypto tax guide →
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