The spark for DeFi’s explosion

For a country of 25 million people, Australia is punching well above its weight both economically and in the world of blockchain. Australians have long been avid adopters of new technology, from mobile phones to smart homes, and it is little wonder that they have embraced crypto as well.

Chainalysis Australia ranked 20th out of 154 countries surveyed this year for its 2020 Global Crypto Adoption index, noting that favorable regulation legalizing the technology is driving “steady growth in adoption.”

Australian crypto educator Alex Saunders of Nuggets News said the Australian crypto community encompasses everyone from hard-core BTC maxis, to well-known Ethereans, and a large contingent of BCH and BSV followers.

“There is only a huge percentage of people per capita compared to most countries that are interested in crypto and blockchain,” he explained.

During the past year the crypto ecosystem has thrived despite the pandemic. The Federal Government released a five-year plan called the National Blockchain Roadmap, banks and the finance sector have warmed to the technology, and local projects were instrumental in driving DeFi’s mid-year boom.

DeFi Australia Sector

A host of DeFi Australia’s projects came to global prominence in 2020, including Synthetix – which began life as a stable project Havven in the country’s largest ICO in 2018, before morphing into a decentralized version of BitMEX using synthetic assets.

Synthetix founder Kain Warwick is also known as the “father of modern agriculture” for popularizing the concept of product farming that sparked DeFi 2020’s prosperity.

“We’ve had some really big projects coming out of Australia,” explained David Rugendyke, founder of Eth2’s Sticket Pool Rocket Pool.

“I think Synthetix is ​​the most notable only because they do a pretty amazing job. All of these things are very advanced technology. “

Based in Brisbane, Queensland, Rocket Pool is a decentralized Eth2 stacking service that will enable users without the minimum 32 ETH, or the desire to run their own authenticator, the ability to make a share. Ren is a decentralized way to create token Bitcoin and other coins that can be used in DeFi, while mSTABLE allows users to exchange USD stablecoins with zero slippage and high yield gain. Meanwhile Thorchain (RUNE) is an upcoming cross-chain version of Uniswap. Henrik Andersson, Chief Investment Officer of the Melbourne-based Apollo Capital fund, said:

“Many of these projects are among the best in the world.”

Favorable regulations

Rudgendyke said that generally favorable regulations are one reason that local projects can thrive as it enables them to “build in a way that meets regulatory requirements but also not stifle what they are trying to achieve. “he said.”

“I think we’re kind of going in the right direction by nurturing that innovation rather than taking the heavy-handed approach like the SEC (US).”

To take a couple of examples, crypto-friendly capital raising platform Stax launched the first IPO in Australia with permission to receive crypto in the form of USDT for its client West Coast Aquaculture Group in October. Upon completion in November, approximately 89% of the $ 5M raised was contributed at Tether.

And at the beginning of the year a judge in New South Wales allowed plaintiff to put up cryptocurrency as security against costs being awarded against them, with the judge calling crypto a “recognized form of investment” – despite his be extremely volatile.

Not a soft touch

But it’s not all good news – Australian exchanges, including Coinspot and Coinjar, were forced by regulators to hand over privacy coins in August, including Monero, Bytecoin and ZCash. Regulators also do not seem keen on ICOs, with many becoming oblivious to current laws that regard them as Managed Investment Schemes requiring licensing.

In February, CEO of Power Ledger in Western Australia, Dr Jemma Green, told a hearing of the Federal Parliament Select Committee on Financial Technology and Regulatory Technology that tax treatment of ICOs was “not fit for purpose” and was part of ‘ Due to the $ 26 billion raised through ICOs to date, Australia only had 0.79%.

“In Australia, the earnings are taxed as income and as a result, Australia is not an attractive proposition to undertake one of these ICOs.”

Crypto payments

One area where Australia is lagging is using crypto for day-to-day payments. A Reserve Bank of Australia study in March found that while 80% of Australians are aware of cryptocurrencies, less than 1% of consumers have used crypto to make a consumer payment.

Chainalysis noted in its adoption report that people in developing economies in the Asia region make crypto payments much more often:

“India and Vietnam already have grassroots adoption higher than Australia, as they are higher on our index at 11th and 10th respectively.”

The adoption of crypto for payments has been a bit of a hurdle in Australia because the country has one of the most advanced electronic payment systems in the world. The New Payment Platform, also known as Pay ID, enables Australians to send or receive instant cash 24/7 using only an email address or phone number.

Ripple attributes a ‘Salary ID’, taken to court

Fortunately, Ripple launched a very similar crypto-based service this year, called ‘PayID’ and was immediately sued by the New Payments Platform in the Federal Court for copyright infringement. In November, Ripple changed the name to ‘PayString’.

Charge ID has also been cited by the RBA as a key reason why the country does not require a central bank digital currency, nor the FAW – despite the bank currently investigating one. In October, RBA’s head of payment policy, Tony Richards, said not to expect CBDC anytime soon:

“Australian homes and businesses are well served by a modern, efficient and durable payment system that has undergone significant innovation in recent years, including the introduction of the new, real-time, electronic payments platform 24 / 7 and full of data. payment system. ”

Saunders said it was a short-sighted decision. “It’s kind of disappointing to hear the RBA say that they don’t see a use case for central bank digital currency, when every other central bank on the planet is talking about how they are in the future and trying to present them , “he said.

Despite its silence, the RBA has since partnered with two of the country’s four major banks (Commonwealth and National), along with developer Ethereum Consensys and financial services company Perpetual to explore wholesale central bank digital currency using a digital ledger based on Ethereum.

In another welcome sign, banks are looking more favorably on the industry, three of the Big Four banks formed a company in September called Lygon to digitize bank securities using blockchain technology. The goal is to cut the processing time from weeks down to one day – primarily for commercial lease guarantees – using IBM’s Hyperledger technology.

Government on board with blockchain

The Government announced $ 4.95 million in this year’s budget to support “two blockchain pilots aimed at reducing business compliance costs”.

But probably more significant was the release of the National Blockchain Roadmap at the beginning of the year, developed by the Federal Government Department of Industry and Science in consultation with the Australian Blockchain industry group. It sets out 12 key recommendations over the next five years and identifies the three most promising use cases for the technology:

Record qualifications and qualifications for the education sector

Supply chain tracking for agriculture and wine exports

Know Your Customer Identity Check for the finance industry

These three areas are also the focus of Australia’s proposed $ 60 million Blockchain Collaborative Research Center. The CRC is asking for a $ 30 million contribution from an industry that would be matched by the government, but so far only a handful of organizations are on the table.

APAC Testing Council

Although the three use cases are being addressed by various enterprises, supply chain tracking could offer the most immediate benefits with an estimated $ 1.7 billion of food and lower quality products being shipped as “Australia” overseas (mainly in China ). A new public body called APAC Testing Council, was set up mid-year by local blockchain businesses in collaboration with VeChain, Mastercard and Alipay.

The aim is to offer guidance to exporters on supply chain tracking and offer them trade finance. The organization has an innovative “milestone” payment system that can provide partial payments when certain conditions are met along the way – such as when a consignment leaves customs – as verified using blockchain.

ASX DLT is not right

One thing that certainly didn’t happen in 2020, and won’t happen anytime soon, is the transformation of the Australian Securities Exchange’s CHESS share registration system – which was due for a makeover with DLT technology. Saunders explained:

“The ASX has just pushed back to introduce blockchain for stock trading until 2023, which is the third time they have pushed it back,” Saunders explained.

The ASX blamed the latest delay on surge volumes in the midst of a market crash in March requiring it to triple the capacity of the system – though part of the reason for the delay is likely from the concerns expressed by some stakeholders key.

Big guys are expanding in Australia

Australia was already well served by crypto exchanges, but the majors have been looking to expand market share here in 2020. Binance, Gemini and have all extended fiat services to Australians this year, with Crypto. com recently announced that it has purchased an Australian. company to use its Australian Financial Service License and issue a Visa credit card.

Kraken Australia opened mid-year, having taken over local exchange Bit Trade. The UK-based Revolut money app – one of the largest brokerage firms in Europe with one million customers – also extended crypto trading services to tens of thousands of Aussies.

The last word

After a year of being restricted to quarters during the pandemic – all of the state’s borders closed and Victorians closed four months in earnest – the crypto community is looking forward to returning to normalcy in 2021. Saunders said he was confined to Tasmania for most of the year and wanted to return to personal events to see how the landscape had changed:

“Now we’re in a bull market, I can’t wait to get out there and amongst the community.”