For a country of 25 million people, Australia is way above its weight both economically and in the world of blockchain. Australians have long been avid adopters of new technology, from cell phones to smart homes, and it’s no surprise they’ve turned to crypto too.
Chainalysis was ranked 20th in Australia out of 154 countries polled for the 2020 Global Crypto Adoption Index this year.
Australian crypto educator Alex Saunders of Nuggets News said the Australian crypto community includes everyone from hardcore BTC maxis to well-known Ethereans to large contingents of BCH and BSV supporters.
“Compared to most of the countries interested in crypto and blockchain, there is only a large percentage of people per capita,” he explained.
Last year, the crypto ecosystem flourished despite the pandemic. The federal government released a five-year plan called the National Blockchain Roadmap. Banks and the financial sector have adapted to the technology, and local projects made a major contribution to the DeFi boom in mid-year.
Australia’s DeFi sector
A number of Australian DeFi projects rose to global prominence in 2020, including Synthetix, which was launched in 2018 as a stable coin project Havven in the country’s largest ICO before being converted to a decentralized version of BitMEX using synthetic assets.
Synthetix founder Kain Warwick is also known as the “Father of Modern Agriculture” for promoting the concept of high yield farming that sparked the 2020 DeFi boom.
“We had some really big projects out of Australia,” said David Rugendyke, founder of the Eth2 stakeout service Rocket Pool.
“I think Synthetix is probably the most notable just because they do a pretty amazing job. All of this stuff is very modern. “
Rocket Pool, based in Brisbane, Queensland, is a decentralized Eth2 stakeout service that allows users to operate without the 32 ETH minimum 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 get high returns. Thorchain (RUNE) is now an upcoming cross-chain version of Uniswap. Henrik Andersson, chief investment officer of Melbourne-based Apollo Capital, said:
“Many of these projects are among the top projects in the world.”
Rudgendyke said that mostly favorable regulations are a reason local projects can thrive, as it allows them “to build in a way that complies with legal requirements but also doesn’t stifle what they’re trying to do,” he said .
“I think we’re going in the right direction by promoting this innovation instead of taking the persistent approach like the (US) SEC.”
To name a few examples: The crypto-friendly capital-raising platform Stax launched its first IPO in Australia in October with permission to accept crypto in the form of USDT for its client West Coast Aquaculture Group. After completion in November, around 89% of the US $ 5 million raised was paid into Tether.
And earlier in the year, a New South Wales judge allowed a plaintiff to set up cryptocurrency as security against the award of costs against them, with the judge calling crypto a “recognized form of investment” – albeit a very volatile one.
Not a gentle touch
But it’s not all good news – Australian exchanges, including Coinspot and Coinjar, were forced by regulators to delist privacy coins like Monero, Bytecoin and ZCash in August. Regulators don’t seem interested in ICOs either, as many are in violation of applicable laws which they view as managed investment schemes that require a license.
In February, Dr. Jemma Green, CEO of Power Ledger in Western Australia, told the Federal Parliament’s Select Committee on Financial Technology and Regulatory Technology that the tax treatment of ICOs was not “expedient” and part of the reason for the $ 26 billion has so far been increased by ICOs , only 0.79% were in Australia.
“In Australia, the proceeds are taxed as income and because of this, Australia is not an attractive proposition to run one of these ICOs.”
One area that Australia is lagging behind is in the use of crypto for everyday payments. A study by the Reserve Bank of Australia in March found that 80% of Australians knew cryptocurrencies, but less than 1% of consumers used crypto to make a consumer payment.
Chainalysis found in its adoption report that people in developing countries in Asia are far more likely to make crypto payments:
“India and Vietnam already have a higher level of acceptance than Australia, as they are 11th and 10th respectively higher in our index.”
The adoption of crypto for payments has been a little hindered in Australia as the country has one of the most advanced electronic payment systems in the world. With the New Payments Platform, also known as Pay ID, Australians can send or receive money instantly 24/7 using just one email address or phone number.
Ripple uses ‘Pay ID’ and is on trial
Funnily enough, Ripple launched a very similar crypto-based service called “PayID” that year and was promptly sued by the New Payments Platform in federal court for copyright infringement. In November, Ripple changed the name to “PayString”.
Pay ID has also been cited by the RBA as the main reason the country doesn’t need a central bank or CBDC digital currency – although the bank is actively looking for one. In October, the RBA’s head of payments policy, Tony Richards, said he would not expect a CBDC anytime soon:
“Australian households and businesses are well served by a modern, efficient and resilient payment system that has seen significant innovations in recent years, including the introduction of the new payment platform, which is a real-time, 24-hour and data-rich electronic payment system. “
Saunders said it was a short-sighted decision. “It’s a little disappointing to hear the RBA say they don’t see a use case for central bank digital currencies when every other central bank on the planet is talking about what the future is like and trying to introduce them.” he said.
Despite its reluctance, the RBA has since teamed up with the country’s two big four banks (Commonwealth and National) along with Ethereum developer Consensys and financial services firm Perpetual to explore a wholesale headquarters digital currency using an Ethereum-based digital ledger.
In another welcome sign, banks see the industry as cheaper: three of the “Big Four” banks founded a company called Lygon in September to digitize bank guarantees using blockchain technology. The goal is to reduce processing time from weeks to a single day using IBM’s Hyperledger technology – mainly for commercial lease guarantees.
Government on board with blockchain
The government announced $ 4.95 million in this year’s budget to support “two blockchain pilots aiming to cut the cost of business compliance compliance.”
Perhaps more significant, however, was the launch of the National Blockchain Roadmap earlier this year, developed by the Federal Government’s Department of Industry and Science in consultation with the Blockchain Australia industry group. It contains 12 key recommendations for the next five years and identifies the three most promising use cases for the technology:
Record certificates and qualifications for the education sector
Supply chain tracking for agriculture and wine exports
Know You Customer Identity Verification for the Financial Industry
These three areas are also at the heart of Blockchain Australia’s proposed $ 60 million collaborative research center. The CRC is asking for a $ 30 million industry contribution that would be paid for by the government, but so far only a handful of organizations are on board.
APAC Provenance Council
While the three use cases are being addressed by different initiatives, supply chain tracking with an estimated $ 1.7 billion worth of food and lower quality products touted as “Australian” overseas (mainly in China) offer the most immediate benefits. A new public body called the APAC Provenance Council was formed by local blockchain companies in collaboration with VeChain, Mastercard and Alipay in the middle of the year.
The aim is to provide exporters with guidance on how to track the supply chain and offer them trade finance. The organization has an innovative “milestone” -based payment system that can provide partial payments when certain conditions are met on the journey – for example when a shipment leaves customs – that are verified using a blockchain.
ASX DLT is out of order
One thing that certainly did not happen in 2020 and will not happen anytime soon is the much-heralded redesign of the Australian Stock Exchange’s CHESS share registration system, which is expected to be overhauled using DLT technology. Saunders stated:
“The ASX has just pushed back the introduction of the blockchain for stock trading through 2023. This is the third time it has pushed it back,” Saunders said.
The ASX blamed the increasing volumes during the March market crash for the recent delays, which required a tripling of system capacity – although part of the reason for the delay is likely the concerns of some key stakeholders.
Big boys are expanding in Australia
Australia has already been well served by crypto exchanges, but the majors have tried to expand market share here in 2020. Binance, Gemini and Crypto.com expanded all fiat services for Australians this year, and Crypto.com recently announced that it has bought an Australian company to use its Australian financial services license and issue a Visa credit card.
Kraken Australia opened in the middle of the year after taking over local exchange Bit Trade. UK-based money app Revolut, one of the largest brokerage firms in Europe with one million clients, has expanded crypto trading services to tens of thousands of Aussies as well.
The last word
After a year of being restricted to roosts during the pandemic – all state lines slammed and the Victorians faced a heavy four-month lockdown – the crypto community looks forward to a return to normal in 2021. Saunders said he was limited to Tasmania for the for most of the year and eager to return to personal events to see how the landscape had changed:
“Now we are in a bull market. I can’t wait to gain a foothold there and in the community.”