Blockchain Australia, the industry body representing local businesses and individuals participating in the technology, has again called on the government and regulators to provide more support for the local blockchain ecosystem.
Its CEO Steve Vallas told the Senate Select Committee on Financial Technology and Regulatory Technology, which is currently in its second round of reviewing the potential of fintech and regtech down under, that the federal government is the “cornerstone of confidence creation in this sector”.
Vallas believes Australia is “well placed” to become a tech-savvy economy, specifically in the blockchain space. But something that has hurt the nation, he said, is the lack of progress in the space in recent years.
He said the National Blockchain Roadmap, which was announced in February last year, was the first of many steps and that he has “enormously confidence in the ecosystem”. But he noted that more needed to be done to support blockchain.
“We are signalling, across the country and to the states, that this is something that people should be investing in,” he said. “That sort of approach needs to be coordinated across other government departments.
“I think we need more signals from regulators in particular that they’re willing to discuss this subject matter with people who are well versed in it.”
He’s concerned that governments internationally, by comparison, have been signalling more strongly to businesses and the banking sector that they should be banking crypto-businesses and encouraging the use of the technology, as some examples.
“Those things, collectively, say: ‘Business, you should be paying attention to this; you should be investigating it.’ Those signals are largely absent from the Australian market,” Vallas said.
He said there’s trepidation with banks and regulators in Australia. Despite this, Vallas believes there’s an opportunity to implement policies that prioritise blockchain technology, as well as investment into digital assets and cryptocurrencies.
“People are happy to talk about blockchain if they decouple from financial services and the impact on the financial services industry and regtech. That decoupling isn’t necessary,” he said.
“I think there should be active consultation there.”
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Discussing Australia not being an attractive destination for blockchain development, Vallas said: “No one wants to land here”.
“I think everyone knows that we have a very good regulatory framework, but the sign doesn’t say ‘Open for business’ with respect to this technology, so, when we look at some of the custodian businesses and the like that are taking shape in the United States, they’re not naturally coming to Australia because no one is saying that this is a welcoming environment and you can trust our regulatory framework and we’re open to a conversation about what these businesses could do in Australia,” he said.
Appearing alongside Vallas were three academic economists and lawyers affiliated with the RMIT Blockchain Innovation Hub in Melbourne. Appearing in a personal capacity, the trio outlined their position that “ongoing regulatory possibilities of blockchain innovations are critical”.
Dr Darcy Allen said the group’s interactions with industry partners suggest some current challenges in Australia, such as the taxation system, the potential treatment of blockchain and decentralised finance, and products as managed investment schemes, some of these issues relating to initial coin offerings (ICOs).
Another challenge, he said, was whether blockchain-based records would be accessible by Australian regulators.
“Our recommendation is that governments aid the transition to a digital economy by using and improving regulatory reform tools, such as sandboxes, to facilitate the process of regulatory evolution,” he said.