MHC Digital Finance - March 23, 2021
Australians have proven enthusiastic early adopters of this new suite of technologies. The government has backed development through investment together with clear regulation, paving the way to make the country a hub for blockchain services.
Bitcoin and blockchain are global phenomena, but different countries have been more or less willing to explore the advantages of new decentralised assets and platforms. There are several reasons for this, from national demographics through to the regulatory environment, and the effects of these are still felt across the world in the relative uptake of cryptocurrency.
Australia enthusiastically sought to become an early adopter and global leader in the field of crypto. The country’s first digital currency exchange opened in 2013, and is still running today. Since then, multiple new exchanges have opened up, serving not just Australia but the world.
In addition to a thriving trading and investment scene, there is strong technical interest in crypto at the grassroots level. Like many large global cities, Sydney is a hub for activity and is home to some of the best Ethereum developers in the world.
Furthermore, Australia has produced its fair share of entrepreneurs and blockchain startups. The first ICO took place in October 2016, and Chrono.tech’s own token sale followed shortly after, proving to be one of the great success stories of the early token sale phenomenon.
Crucially, all of this activity has been supported by a government that is generally both supportive of crypto and keen to leverage blockchain technology as a key part of the Australian economy.
2017: Early clarity
Intense interest in cryptocurrencies caught many governments off-guard, leaving them scrambling to catch up. Australia was ahead of the curve, releasing guidance throughout 2017. Specifically, the government stated that cryptocurrencies were legal and set out a clear tax position, treating them as property that was subject to capital gains tax. This clarification also removed the double-taxation problem that had previously existed under the country’s goods and services tax (GST), and signaled that Australia was open for business in the blockchain and crypto sector.
2018: AUSTRAC regulation
This move was followed in 2018 by clear and robust AML/CTF regulations for crypto exchange providers by Australia’s financial intelligence agency, AUSTRAC. All exchanges were required to register with AUSTRAC to ensure users were identified and kept records to comply with AML/KYC laws. The regulator would come to play a key role in setting out and enforcing guidelines for blockchain companies, ensuring best practice and security were maintained, and providing reassurance for consumers.
2020: the National Blockchain Roadmap
This even-handed interest in crypto – protecting consumers without stifling innovation – would culminate in a major national initiative. In March 2019, government ministers commissioned a Roadmap for the new industry, in partnership with businesses, universities and government bodies, as well as being informed by workshops hosted by the Department of Industry, Science, Energy and Resources.
The Roadmap recognised both the importance of blockchain for the national economy, and the successful blockchain businesses and applications that had already been launched in Australia. The economic benefits of the blockchain sector were estimated at over US $175 billion by 2025 alone, and an incredible $3 trillion by 2030.
The Roadmap sought to lay out a strategy for government, researchers, and industry to make the most of the opportunities offered by decentralised technologies. It also identified a series of challenges that would need to be addressed, including maintaining trust, ensuring security, and balancing transparency with privacy. Investment was provided by the government to explore some of these issues and lead the development of a set of standards for the industry.
The coronavirus recovery package
The coronavirus pandemic brought cryptocurrencies squarely into mainstream consciousness, not least because the economic impacts of the crisis prompted widespread corporate investment in bitcoin and saw the price of the leading digital asset appreciate by more than 1,000% as a result.
Governments across the world have made economic recovery a priority, through means of money printing, tax holidays, furlough schemes and other approaches. In Australia, the government announced a major investment initiative to boost the nascent blockchain sector and help the tech industry lead the country out of recession. US $575 million was earmarked for digital solutions and modernisation, with $7 million specifically aimed at cutting compliance costs in the blockchain sector.
The road ahead
While COVID-19 has exacted a heavy toll on Australia and the world, and blockchain and crypto have been beneficiaries of the economic and technical changes the pandemic has brought. The blockchain industry has not only weathered the pandemic, but thrived – not least due to its emphasis on remote working and its entrepreneurial spirit. It has been one of the few sectors that has seen significant growth and investment as others were cutting budgets.
At the grassroots level, the picture is similar. Everyday Australians are now more aware of crypto than ever; awareness of bitcoin runs to some 90% of the population, and a falling number still believe bitcoin and digital assets are scams. At the end of 2020, one in five Australians owned crypto – far ahead of other countries, where uptake has been slower. Reliable figures are hard to come by, but the figure may be around just 10% for the US. Since unemployment rates are high and spending has been squeezed, it’s reasonable to expect these figures to rise sharply as the economy recovers through 2021 and beyond. In fact, a third of those who intended to buy crypto in 2020 did not, citing the recession as the cause.
All this paints a picture of Australia as a nation that is ahead of the curve in every respect when it comes to bitcoin, blockchain and cryptocurrency. With a strong history of engagement and entrepreneurship, clarity and financial backing by the government, light-touch regulation, and a vibrant developer and investor scene, it’s clear that crypto has a bright future Down Under.