Australia is trailing when it comes to cryptocurrency, as banks and regulators fall behind the boom
- Australia risks being left behind on digital assets, the local blockchain community has warned.
- Blockchain Australia CEO Steve Vallas said Australian banks were dragging their feet and would be beaten by international companies if they didn’t act fast.
- NAB CEO Ross McEwan meanwhile echoed industry fears that the lack of local regulation was holding back local businesses from getting involved amid growing interest.
Australia may have what it takes to be a global cryptocurrency hub, but right now the burgeoning industry says it is being hamstrung by reluctant regulators and indifferent policymakers.
The blockchain community is intending to deliver a kick to both during the inaugural Blockchain Australia week which began on Monday.
“We’re well placed but that doesn’t mean we’re doing a good job, just that we’re in a good position to do something,” Blockchain Australia CEO Steve Vallas told Business Insider Australia.
“I would have said the same thing a few years ago but while back then other jurisdictions weren’t moving, they are now and we’re at risk of losing our place.”
As the price of Bitcoin hangs around the stratosphere and interest from middle Australia rebounds, there’s no shortage of excitement among the true believers.
Independent Reserve CEO Adrian Przelozny said the business he started in 2012 has made more revenue in the last few months than it had in the previous three years, as interest has swelled.
The factors driving it are many. Institutional money is flowing into digital assets. Respected companies and financial institutions from Tesla to Morgan Stanley are getting involved. Payment giants like PayPal, Mastercard and Stripe meanwhile are getting on board, furthering the use case for cryptocurrencies.
Yet while much is happening abroad, in countries like the US, there’s a certain reticence among Australia’s own financial incumbents.
No super fund in the country is offering the option to invest in cryptocurrency, despite Independent Reserve’s research indicating one in two Australians under the age of 35 are interested in investing their retirement savings into it.
It has led crypto exchanges, like Independent Reserve and BTC Markets, to fill the gap instead.
“We started offering self-managed super fund options to do that a few years ago just off organic demand, and now we’re running around 9,000 of them,” Przelozny said.
He puts some of the fumbling of the issue down to the country’s insularity. Australia’s big four banks, for example, are used to operating in a fairly uncompetitive and profitable ecosystem, but Przelozny says they’re wrong to not take crypto more seriously.
“They haven’t done anything because they don’t have to right now, but once the big international guys move into this space in Australia they won’t have a choice,” he said.
By that stage though Vallas believes it’ll be too late, with some of those giants in conversation this week with the head of the regulatory technology committee, Senator Andrew Bragg.
“The big banks will absolutely have their lunch eaten when globally competitive businesses set up shop here,” Vallas said.
“We have Senator Bragg on a stage at the ASX with PayPal and Master [this] week talking about digital assets. Is that not a signal?”
Holding the country back, the industry says, is an Australian complacency that has seen regulators hang back on designing and implementing rules for it.
“In our experience over the last few years, we found AUSTRAC was very open, very proactive, very willing to learn. We haven’t quite had the same experience with ASIC or the RBA,” Przelozny said.
The Reserve Bank of Australia (RBA) has revealed it is tinkering with digital versions of the Australian dollar behind closed doors. While it’s spoken publicly about the future of cryptocurrency however, it has done little to bring the country closer to that reality.
Australia’s banks likewise seem frustrated. Speaking to a House Committee on Friday, NAB CEO Ross McEwan echoed the thoughts of the industry.
“We need to think, as a country, ‘what is crypto, how could it be used, and do you trade it?’,” McEwan said. “If it is something that should be traded safely, [how do] we make it safe?”
“Those are the issues we need to think about – and quite quickly – because people are making a livelihood out of trading.”
The absence of clear rules forces Australians to look elsewhere. While there are at least three applications for crypto ETFs with the ASX right now, the lack of them is forcing Australians to look overseas or invest in inherently riskier products.
All the while, McEwan said he sees the use cases of blockchain more broadly, although retains doubts about cryptocurrency specifically.
But regardless of personal viewpoint, it’s clear that Australia can’t just sit idly by.
“There is a lot of people investing in this at the moment and trading in it, and … there is a lot of work that needs to be done,” McEwan said.