For a country of 25 million inhabitants, Australia is performing well above its weight both economically and in the world of blockchain. Australians have long been avid users of new technology, from cell phones to smart homes, and it’s no surprise they’ve embraced crypto too.
Chainalysis ranked Australia 20th out of 154 countries surveyed this year for its 2020 Global Crypto Adoption Index, citing favorable regulations that legitimize the technology as a driving force behind “steady growth in adoption.”
Australian crypto educator Alex Saunders of Nuggets News said Australia’s crypto community includes everyone from hardcore BTC maxis to well-known Ethereans and large contingents of BCH and BSV followers.
“There is just a huge percentage of people per capita compared to most countries interested in crypto and blockchain,” he explains.
For the past year, the crypto ecosystem has thrived despite the pandemic. The federal government has released a five-year plan called the National Blockchain Roadmap, banks and the financial industry have warmed to the technology, and local projects have been instrumental in fueling the mid-year DeFi boom.
Australia’s DeFi sector
A large number of Australian DeFi projects gained worldwide exposure in 2020, including Synthetix – which started in 2018 as a stablecoin project Havven in the largest ICO in the country, before turning into a decentralized version of BitMEX using synthetic assets.
Synthetix founder Kain Warwick is also known as the “father of modern farming” for popularizing the concept of yield farming that sparked the DeFi boom in 2020.
“We’ve had some really big projects coming from Australia,” explains David Rugendyke, founder of Eth2 stakeout service Rocket Pool.
“I think Synthetix is probably the most notable just because they do a pretty fantastic job. All of these things are very advanced technology. “
Based in Brisbane, Queensland, Rocket Pool is a decentralized Eth2 stakeout service that allows users to deploy without the minimum 32 ETH, or the desire to run their own validator. Ren is a decentralized way to create tokenized Bitcoin and other coins that can be used in DeFi, while mSTABLE allows users to exchange stable USD coins without any slip and earn high returns. Thorchain (RUNE), meanwhile, is an upcoming, cross chain version of Uniswap. Henrik AnderssonMelbourne-based Apollo Capital’s Chief Investment Officer said:
“Many of these projects are among the best in the world.”
Rudgendyke said predominantly favorable regulation is one reason local projects can thrive, because it allows them to “build in a way that meets legal requirements, but also doesn’t get in the way of what they’re trying to do” , he said.
“I think we’re going a little bit in the right direction by promoting that innovation instead of taking the heavy-handed approach like the (US) SEC is.”
To cite a few examples, crypto-friendly capital raising platform Stax launched the first IPO in Australia with permission to accept USDT crypto for its client West Coast Aquaculture Group in October. When completed in November, approximately 89% of the $ 5 million was raised in Tether.
And at the beginning of the year, a judge in New South Wales allowed a prosecution set up cryptocurrency as security at the cost assigned to them, with the judge calling crypto a “recognized form of investment” – albeit a highly volatile one.
Not a gentle touch
But it’s not all good news – Australian exchanges, including Coinspot and Coinjar, have been forced by regulators privacy coins will be deleted in August, including Monero, Bytecoin and ZCash. Regulators also seem unenthusiastic about ICOs, with many contradicting the current laws they consider Managed investment schemes licensed.
In February, Western Australia-based Power Ledger CEO, Dr Jemma Green, told the Federal Parliament Selected Committee on Financial Technology and Regulatory Technology to be told that the tax treatment of ICOs was not “fit for purpose” and part of the reason was that of the $ 26 billion raised through ICOs so far, only 0.79% was in Australia.
“In Australia, the proceeds are taxed as income and as a result Australia is not an attractive proposition to execute any of these ICOs.”
One area where Australia is lagging behind is the use of crypto for everyday payments. A survey by the Reserve Bank of Australia in March found that while 80% of Australians were aware of cryptocurrencies,less than 1% of consumers have used crypto to make a consumer payment.
Chainalysis noted in its adoption report that people in emerging economies in the Asian region are much more likely to make crypto payments:
“India and Vietnam already have higher grassroots acceptance than Australia as they rank 11th and 10th respectively on our index.”
The adoption of crypto for payments is a bit paralyzed in Australia as the country has one of the most advanced electronic payment systems in the world. The New Payments Platform, also known as Pay ID, allows Australians to send or receive instant money 24/7 using just an email address or phone number.
Ripple appropriates ‘Pay ID’, is taken to court
Funnily enough, Ripple launched a very similar crypto-based service called ‘PayID’ this year and was promptly sued by the New Payments Platform in Federal Court for copyright infringement. In November, Ripple changed its name to ‘PayString’.
Pay ID has also been cited by the RBA as a major reason why the country doesn’t need central bank digital currency or CBDC – despite the bank actively researching it. In October, Tony Richards, the RBA’s chief of payment policy, said not to expect a CBDC soon:
“Australian households and businesses are well served by a modern, efficient and resilient payment system that has undergone significant innovation in recent years, including the introduction of the New Payments Platform, a real-time, 24/7 and data-rich electronic payment system.”
Saunders said it was a shortsighted decision. “It’s a bit disappointing to hear the RBA say they don’t see a use case for central bank digital currencies, as every other central bank in the world talks about how they are the future and tries to roll them out,” he said.
Despite its reluctance, the RBA has since partnered with the two of the country’s four major banks (Commonwealth and National), along with Ethereum developer Consensys and financial services provider Perpetual to create a wholesale central bank digital currency using an Ethereum-based digital ledger.
In another welcome sign that banks are looking more positively at the industry, three of the ‘Big Four’ banks set up a company called Lygon in September to digitize bank guarantees using blockchain technology. The goal is to reduce processing time from weeks to one day – primarily for commercial lease guarantees – using IBM’s Hyperledger technology.
Government on board with blockchain
The government announced $ 4.95 million in this year’s budget to support “two blockchain pilots aimed at reducing compliance costs for businesses ”.
But probably more significant was the release of the National Blockchain Roadmap at the start of the year, which was developed by the federal government’s Department of Industry and Science in consultation with industry group Blockchain Australia. It contains 12 key recommendations for the next five years and identifies the three most promising use cases for the technology:
Record credentials and qualifications for the education sector
Supply chain tracking for agriculture and wine exports
Know You Identity verification of clients for the financial sector
These three areas are also central to Blockchain Australia’s $ 60 million Cooperative Research Center. The CRC requires a $ 30 million contribution from industry matched by the government, but so far there are only a handful of organizations on board.
APAC Provenance Council
While the three use cases are being addressed by different initiatives, following the supply chain could provide the most immediate benefits with an estimated $ 1.7 billion worth of inferior food and products being passed abroad as “Australian” ( usually in China). A new public body called the APAC Provenance Council, was founded mid-year by local blockchain companies in partnership with VeChain, Mastercard and Alipay.
The aim is to guide exporters in following the supply chain and to offer them trade finance. The organization has an innovative “milestone” -based payment system that can provide partial payments when certain conditions are met during the journey – such as when a shipment leaves customs – as verified using blockchain.
ASX DLT is not OK
One thing that certainly hasn’t happened in 2020, and won’t happen anytime soon, is the much-hyped transformation of the Australian Securities Exchange’s CHESS share registration system – which was expected to be revised using DLT technology. Saunders explained:
The ASX has just pushed blockchain rollout for equity trading back to 2023, and that’s the third time they pushed it back, ”Explained Saunders.
The ASX blamed the latest slowdowns on rising volumes during the March market crash, which forced it to triple the system’s capacity – although part of the reason for the slowdown is likely to be concerns raised by some key stakeholders.
Big boys are expanding in Australia
Australia was already well served by crypto exchanges, but the majors were looking to expand the market share here in 2020. Binance, Gemini and Crypto.com expanded all fiat services to Australians this year, with Crypto.com recently announcing that it had purchased an Australian company to use its Australian Financial Service License and a Visa credit card.
Kraken Australia opened in the middle of the year following the acquisition of Bit Trade. UK-based money app Revolut – one of the largest brokerage firms in Europe with a million customers – also expanded crypto trading services to tens of thousands of Aussies.
The last word
After being locked in quarters for a year during the pandemic – all state lines were slammed and Victorians went through a severe four-month blockade – the crypto community is looking forward to a return to normalcy in 2021. Saunders said he was limited to this. Tasmania for most of the year and was keen to return to in-person events to see how the landscape had changed:
“Now that we’re in a bull market, I can’t wait to really get out there and get into the community.”