Australian residents are no different from residents of other parts of the world when it comes to trading or investing in cryptocurrencies. This exciting investment medium has been increasing in popularity across the globe since its early beginnings in 2009. Bitcoin (BTC) was the initial digital currency based on blockchain technology, but now there are nearly 22,000 programs.
A very small portion of these tokens are actually traded in the crypto market, but Bitcoin continues to lead all of its alternative-coin systems. It has a 38.3% share of the overall crypto market, which today totals just over US$850bn. As large as the market can be, often fluctuating between $1tn and $3tn, it is largely unregulated – a cause for concern for both regulators and government officials. Cryptos have earned a reputation for being the most volatile asset class in history. Rapid price swings are common, and trading can be very risky.
How does one get started trading crypto pairs in Australia? Fortunately, the industry has evolved a great deal in the past 13 years. Unregulated exchanges, which experienced a flurry of hacking compromises and losses in the billions of dollars, were once a trader’s only mode of access to the crypto market. Today, however, brokers have rushed to serve their customers with a variety of ways to trade this financial instrument. These ways will depend upon whether you wish to be a long-term investor or trade by benefiting from the opportunities provided by price volatility.
In the article to follow, we will assist you in your journey by explaining how crypto trading is conducted, how safety and security are major issues in this genre, which programs to consider trading, and how to go about selecting a safe crypto broker in Australia. We are here to help you in your selection process by providing an up-to-date list of the very best and safest crypto brokers available to Australians near the end of this article. Take your time learning about cryptos. Preparation is key.
What Is Crypto Trading?
Crypto trading is quite different from mainstream, traditional investing in a financial instrument. The reason for this difference is that you must deal with blockchain technology, where you own an address on the system and the ‘keys’, which allow you access to your crypto asset. These complications, along with a network of exchanges where security was not top of mind, resulted in several major hacking losses, especially to exchanges in the Asia-Pacific region. Billions of dollars in losses had to be absorbed by exchange owners and their clients.
The only protection available came from offline electronic wallets, a new industry that sprang up overnight. Since those scandal-ridden days, exchanges have upgraded their platforms to provide a form of offline wallet for storing customer assets. Brokers, however, have created an alternative investment vehicle in the form of a contract for difference (CFD), which eliminates this security issue and allows traders to participate with smaller investments.
When you purchase a CFD, you are speculating on the price direction of your chosen asset (i.e., crypto). You deal directly with your broker, risking an amount of capital at your discretion, possibly using leverage, and you never have to purchase the underlying asset. If you are correct in your choice of price direction, you can make a tidy return, but casualty rates tend to be high due to the erratic price swings in the crypto market. Always follow a strategy and manage your risk.
Is Crypto Trading safe?
The Australian Securities & Investments Commission (ASIC) regulates crypto trading in Australia. Its concerns centre on the volatility of these assets, the scams and the outright fraud present in many Initial Coin Offerings (ICOs).
These new rules concerned the reduction of CFD leverage, eliminating deposit incentives and bonuses, set margin closeout ratios, and instituted negative balance protection. If a broker solicits Australian residents, it must comply with these rules, but the regulator does not force Australian residents to deal only with these brokers. Australians may choose a foreign broker at their discretion, but they will not be afforded the protections provided under ASIC rules.
When it comes to crypto trading, Australia-based traders are highly recommended to choose an ASIC-approved broker. However, even then, there can be other safety issues. Third-party theft of your ‘keys’ and assets is ever present, for example. You can address volatility risk by employing risk management techniques, but there will always be the possibility of government intervention that could destroy valuations.
- Is crypto trading legal in Australia?
- The best crypto brokers in Australia
- How to start CFD trading in Australia?
The Best Cryptos to Trade in Australia
Unless you want to gamble on the riskiest elements of this medium, your safest route would be to consider only the top 15 crypto programs. All of these token systems have a market cap in excess of US$5bn and have established acceptable track records. These larger programs have significant daily trading volumes, a must for liquidity and acceptable ‘Bid/Ask’ spreads.
As you will see over time, the rankings in this group can change as swiftly as prices, but Bitcoin has always been the leader by far. BTC currently claims a 38.3% share of the total market capitalisation for the crypto world. The remaining participants in the top 15 grouping command a hefty 45% of the action, leaving only 16.7% for all other programs to fight over. In the crypto world, size does matter when it comes to safety.
Newcomers to the crypto space are often advised to avoid the temptation of gambling on smallish programs and to focus on Bitcoin, Ethereum (ETH), and perhaps one other from the top 15. Three of these programs are actually pegged to the USD and provide a safe place to put your capital when you are not holding positions in the variable valued leaders. These pegged tokens allow for easy transfers to actual BTC and ETH positions when deemed appropriate.
There are also tax implications for trading in crypto pairs. Rules in this area are in their formative stages, like most other rules regarding digital currencies. There are issues related to whether ordinary income or capital gain exceptions apply. In some cases, the taxable event is defined as when the crypto asset is exchanged for your local currency, another reason why the pegged tokens are popular in today’s crypto market.
As for the top 15 programs, we have listed each program below, including their investment call sign, which is three to five letters. Some brokers may only choose to carry the leading three programs or even less. Some agents may offer 60+ crypto pairs, but these may be traded via CFDs. Here are the top 15 coins:
- Bitcoin (BTC)
- Ethereum (ETH)
- Tether (USDT) – USD pegged
- BNB (BNB)
- USD Coin (USDC) – USD pegged
- Binance USD (BUSD) – USD pegged
- Ripple (XRP)
- Dogecoin (DOGE)
- Cardano (ADA)
- Polygon (MATIC)
- Polkadot (DOT)
- Dai (DAI)
- Litecoin (LTC)
- Shiba Inu (SHIB)
- TRON (TRX)
How to Choose a Safe Crypto Broker in Australia
The first priority when choosing a safe crypto broker is to consider only those that are regulated by ASIC or another major regulator. Avoid overtly favourable solicitations from foreign brokers, and it is advised to start with the list in the following section to begin comparing fees, trading platforms, support, and product portfolios that suit your trading style.
These brokers offer free demo systems. Give them a trial run. Test a trading strategy designed for the cryptos of your choice and experience the excitement in virtual mode. Try going both long and short on an asset pairing. These demo sessions will help you decide which broker platforms are the most user-friendly and straightforward when it comes to trading CFDs or cryptos directly.
The Safest Crypto Brokers in Australia
If you are searching for a safe crypto broker in Australia, we have already done the heavy lifting for you. We continually review and update our reviews for the top brokers in Australia, especially the ones that offer crypto assets for trading. Here is a table of our latest findings:
Features Min Deposit EURUSD Spread
67% of CFD traders lose
US Clients: Yes (eToro USA) Regulated : Yes
$200 from 1
Your capital is at risk
US Clients: No Regulated : Yes
$500 From 0.6 pips
Trading cryptocurrency pairs in Australia is legal and gaining in popularity day by day among Australian residents. Trading crypto CFDs is by far the easier method to employ, as your capital outlay will be minimal and you will be able to go both long and short. Fine-tune your trading strategy on a demo platform, and then start slowly in real time, when you feel ready.