A handful of Australian startups have pushed along use-cases to the government’s FinTech Advisory Group in order to promote a digital Australian Dollar.
A need for a government-backed digital currency is becoming more and more prevalent in Australia. The combination of a thriving economy, an innovative startup culture, and the growing interest in blockchain technologies places the country in a unique position to explore innovations. Moreover, the country has experienced a handful of legislative actions that have helped to usher cryptocurrencies into the mainstream. The Australian treasurer, Scott Morrison, for instance, removed Goods and Services Taxes on digital currencies. This effectively treats currencies like bitcoin as physical money in regards to taxation in Australia.
Though the sensationalized reports of bitcoin becoming the national currency are, as usual, far from the truth, Sydney is still one of Oceania’s most prominent start-up hubs. A KPMG report from July revealed that most of the 579 total FinTech companies in Australia are located in Sydney. In 2016, donors invested $675 million into a FinTech market that was far from bullish. And most recently, the use-cases presented by blockchain startup’s FlashFX, AgriDigital, and Othera show even more room for innovation and acceptance.
Reserve Bank of Australia
Despite the inherent desire to separate itself from large banking institutions, proponents of a Digital Australian Dollar are interested in getting backing from the Reserve Bank of Australia. Such backing would earn a portion of trust in cryptocurrencies that may still be lacking, but it would also ensure that the fiat Australian Dollar isn’t undermined.
Danielle Szetho, the FinTech Australia chief executive, told Business Insider Australia that:
“Having key stakeholders like the RBA involved in further explorations of an Australian digital currency will help build trust and usage of cryptocurrencies, but at the same time will ensure we do not undermine Australia’s currency stability and sound monetary policy.”
This would also allow for a safe and secure method of experimentation in a field with much fewer regulatory barriers. As ICO fraud has also been rampant in the country, John Price, the Australian Securities and Investments Commission commissioner, released a statement in September very similar to other regulators worldwide:
“ICOs are highly speculative investments, are mostly unregulated, and the chance of losing your investment is high. Consumers should understand the risks involved, including the potential for these products to be scams, before investing.”
Flash FX, AgriDigital, and Othera
Though the three Australian startups mentioned haven’t had much difficulty staying afloat, each has an invested interest in the creation of an Australian digital currency. This is in part because each of these companies run some form of blockchain platform that would be augmented through the introduction of a national cryptocurrency. It would combine the trust of a regulated currency through support from the RBA, as well as provide already established FinTech companies the ability to explore their respective fields.
FlashFX, an international money transferring startup, explains how a digital currency backed by Australia would help achieve better transparency and speed for exchanges. Nicolas Steiger, the chief enabling officer of FlashFx, confirmed that “A government-endorsed digital Australian dollar has the potential to lead to increased trust and certainty, particularly to grow the digital currency marketplace.”
Another FinTech startup, AgriDigital, also pushed their use case as it would streamline the blockchain procedure used for grain transactions between farmers and purchasers. Due to the mercurial nature of cryptocurrencies, all transactions still occur through fiat currencies despite the infrastructure to support digital exchanges. Co-founder of AgriDigital, Emma Weston, explained that “A centrally issued Digital Australian Dollar, backed by fiat [physical] currency, would enable payments to be made between participants in real time and 24/7 along the supply chain.”
The last company to argue for the implementation of the Digital Australian Dollar is a company looking to use the blockchain as a lending platform. Othera specifically helps businesses to tokenize whole or segmented loans and then allows loan originators and investors to exchange these tokens. John Pellew, the chief executive of Othera, believes that a national digital currency would enhance the functionality of his company by eliminating the need for a third party banking system. Similar to Weston, Pellew also described the need for a digital currency in relieving a tedious exchange mechanism: “This is a slow and expensive process and does not utilize the built-in capability of the blockchain smart contracts to auto process these repayments…A [Digital Australian Dollar] would unlock the full potential of our blockchain and smart contract technology.”
The Digital Australian Dollar To Unlock Innovation
Although the major argument for integrating the Digital Australian Dollar is its benefit to each company, a secondary claim that it would also stimulate innovation also proves inviting. The ability of each company to use blockchain in its full expression could lead to growth in an already interesting market. Weston concluded by saying that a Digital Australian Dollar would put, “the Australian agricultural technology industry in a strong and globally competitive position.”
Cryptocurrency purists may critique these startups for continuing to rely on banking institutions and government bodies, but these carefully measured steps may provide the foundation for continued exploration. Government backing, in addition to a hub of creative business ideas, spells more secure innovation on a global scale.