RBA

Coinbase met with Australian banking regulators over local crypto regulations

Coinbase’s vice president of international policy told Cointelegraph the meetings took place in Canberra and Sydney and touched on the government’s token mapping efforts.

The Reserve Bank of Australia and Treasury have been holding private meetings with executives from Coinbase, with discussions revolving around the future of crypto regulation in Australia.

Responding to Cointelegraph’s request for comment, an RBA spokesperson confirmed recent reports that these private meetings had occurred, stating that Coinbase met with the RBA’s Payments Policy and Financial Stability departments this week “as part of the Bank’s ongoing liaison with industry.”

Coinbase vice president of international policy Tom Duff Gordon, who was reported to have flown in for the meetings, also confirmed to Cointelegraph that meetings took place with Treasury in Canberra and Sydney.

Gordon said that the meetings touched on the government’s token mapping efforts, and Coinbase also “shared insights on global best practices concerning licensing and custody.”

The Australian Treasury’s token mapping exercise was announced on Aug. 22, and is aimed at categorizing digital assets in a way to work them into existing regulatory frameworks.

A consultation paper was released by the Treasury on Feb. 3, for which the Treasury sought feedback from the crypto industry.

Gordon praised efforts from the Treasury, noting that “The Australian Treasury teams continue to impress us with their high level of sophistication and active involvement,” adding:

“The Australian Treasury’s token mapping exercise provides one of the most detailed and thoughtful papers we have encountered on the topic, setting a strong foundation for their forthcoming draft rules for crypto exchanges and custodians.”

Gordon expressed his desire to see the rules “later this year,” adding that he appreciated “the Treasury’s comprehensive groundwork.”

In contrast, Coinbase co-founder and CEO Brian Armstrong has been critical of the approach to crypto regulation in the United States, echoing accusations that the Securities and Exchange Commission (SEC) is “regulating by enforcement” and claiming that the SEC wants firms to register with them despite there being no way to register.

Related: National Australia Bank makes first-ever cross-border stablecoin transaction

Documents recently obtained by the Australian Financial Review under freedom of information laws suggested that crypto legislation in Australia could be dragged out past 2024 and beyond, however, as final submissions to the cabinet are not expected until late in the year.

Coinbase expanded to Australia on Oct. 4, 2022, with Coinbase Vice President of International and Business Development Nana Murugesan telling Cointelegraph at the time that the exchange was “very impressed with the open door that we’ve received in Canberra and with different policymakers.”

Australian central bank to launch ‘live pilot’ of CBDC in coming months

The use cases for the CBDC ranged from offline payments to “trusted Web3 commerce” and financial industry participants were invited to undertake a live pilot.

Australia’s central bank is set to launch a “live pilot” of a central bank digital currency  “in the coming months,” according to a joint statement from the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre, an Australian financial research institute.

The RBA said on March 2 that it was collaborating with the DFCRC on a research project to “explore potential use cases and economic benefits of a central bank digital currency (CBDC) in Australia.”

The RBA said the initial stage of the research project involves the selection of several financial industry participants to demonstrate potential use cases of the CBDC.

The pilot project will commence on Mar. 31 and finish on May. 31, with a final report on the findings, including an assessment of the various use cases developed, set to be published on Jun. 30.

Use cases being piloted include offline payments, tax automation and a CBDC for “trusted Web3 commerce,” with participants of the trial ranging from banks — such as Commonwealth Bank and Australia and New Zealand (ANZ) bank — to payment providers such as Mastercard.

Selected CBDC use cases and the providers of each. Source: RBA

Brad Jones, assistant governor for financial systems at the RBA, said, “The pilot and broader research study that will be conducted in parallel will serve two ends – it will contribute to hands-on learning by industry, and it will add to policymakers’ understanding of how a CBDC could potentially benefit the Australian financial system and economy.”

David Lavecky, the co-founder and CEO of blockchain firm CANVAS — one of the firms selected as a trial participant — told Cointelegraph they were selected to explore the potential benefits of using a CBDC in the context of tokenized foreign exchange (FX) transactions.

Lavecky notes that FX and remittance markets are “enormous,” with trillions of dollars traded daily. “And the surprising part is that it moves on very legacy rails at this slow speed.”

Related: United States CBDC would ‘crowd out’ crypto ecosystem: Ex-Biden adviser

He sees CBDCs and digital currencies as having the potential to move currency much quicker and cheaper than these legacy systems, as well as allowing these markets to operate outside of normal business hours. 

“For example, when you’re sending money to New Zealand from Australia, the cut-off was like 1 or 2 pm. So a lot of that friction and capability gets put away when you start moving into digital currencies and CBDCs.”

While many people object to CBDCs from a privacy standpoint, Lavecky notes that this issue would be one of the factors considered, but highlighted that this project was much more focused on examining potential use cases and deciding if the issuance of a CBDC is worthwhile.

“There’s been no decision made about whether a CBDC would be issued and what technology it would use; this is very much just research around capabilities and what’s possible really. So understanding that privacy is a concern, that’s something there can be solutions put forward to, as part of the pilot.”

Eli Ben-Sasson, co-founder and President of blockchain scaling technology firm StarkWare, which provides with its zero knowledge (zk) rollup engine StarkEx, sees the pilot program as “an important step in the journey” to incorporate blockchain into traditional finance, adding: 

“What we very much need is a set of use cases that show people new digital currencies aren’t empty hype, but rather can do stuff we all need in our normal lives. The question is how to best do this.”

Turkey’s central bank completes first CBDC test with more to come in 2023

After recently completing its first payment transactions using a central bank digital currency, the Turkish central bank is pushing ahead with more tests over 2023.

The Central Bank of the Republic of Turkey (CBRT) has completed the first trial of its central bank digital currency (CBDC), the Digital Turkish Lira, and has signaled plans to continue testing throughout 2023. 

According to a statement released by the CBRT on Dec. 29, the central bank authority said it successfully executed its “first payment transactions” using the digital lira.

It said it will continue to run limited, closed circuit pilot tests with technology stakeholders in the first quarter of 2023, before expanding it to include selected banks and financial technology companies in the rest of the year.

It said the results of these tests will be shared with the public through a “comprehensive evaluation report,” before unveiling more the next phases of the study which will further widen participation.

The Turkish central bank first announced it was looking into the benefits of introducing a digital Turkish Lira in September 2021 in a research project called “Central Bank Digital Turkish Lira Research and Development.”

At the time, the government made no commitment to the ultimate digitalization of the country’s currency, noting it had “made no final decision regarding the issuance of the digital Turkish lira.”

In its most recent statement, the CBRT said it will continue testing the use of distributed ledger technologies in payment systems and their “integration” with instant payment systems.

It will also prioritize studying the legal aspects around the digital Turkish Lira, such as the “economic” and “legal framework” around digital identification, along with its technological requirements.

Related: CBDCs are no threat to crypto — Binance CEO

Several countries, including the United Kingdom and Kazakhstan, have recently begun piloting central bank digital currencies.

The Bank of England has opened applications for a proof of concept for a CBDC wallet, while the Kazakhstan central bank has recommended the introduction of an in-house CBDC as early as 2023 with a phased implementation over three years.

The Reserve Bank of Australia (RBA) recently expressed hesitation about its own CBDC plans, with assistant governor Brad Jones warning in a speech on Dec. 8 that a CBDC could displace the Australian dollar and lead to people avoiding commercial banks entirely.

Digital assets could add $40B a year to Aussie GDP: Tech Council report

A clear principles-based regulatory approach to the digital assets sector could be a huge benefit to the Australian economy according to the report.

Up to $40 billion a year (60 billion Australian dollars) could be added to Australia’s national GDP with the right regulatory framework and could lead to enormous cost savings for consumers and businesses, according to a new report.

The Nov. 29 Digital assets in Australia report was commissioned by the Tech Council of Australia (TCA), one of the country’s technology industry advocacy groups, and written by technology consulting firm Accenture, which outlined a number of potential benefits the growth of the digital assets sector in Australia could deliver, stating:

“Digital assets (DA) have the potential to transform our lives offering significant time and cost savings to individuals and businesses.”

The report estimates digital assets — such as cryptocurrencies, stablecoins, tokens and central bank digital currencies (CBDCs) — could deliver an “80% reduction in retail payments costs by 2030,” save Australian businesses 200 million hours per year by automating tax compliance and administration and a further 400,000 hours in preparing documents for business loans.

Potential economic and social benefits of the digital assets sector in Australian dollars. Source: Digital assets in Australia 2022 report.

It also points to potential savings for consumers of almost $2.7 billion per year (4 billion AUD), or $107 (160 AUD) per person, if they use digital assets for international transactions while suggesting that an instant settlement of business transactions could be hugely beneficial for the 4,000 businesses that fail each year due to cash flow issues.

Decentralized autonomous organizations (DAOs) are referred to in the report as a way to build public trust by making decisions, transactions, and procedures “automated and transparent,” with all members of the organization granted equal rights through the issuance of utility tokens.

It also mentions that to fully unlock the potential of DAOs, the government needs to clarify the legal status of DAOs including the liability implications for its members after participants of the Ooki DAO were charged by United States regulators.

The report estimates “up to 100% of payments” could be facilitated by digital assets if a retail CBDC is introduced, pointing to the rapid uptake of retail CBDCs in other countries, such as the e-krona in Sweden.

On Sept. 26, the Reserve Bank of Australia (RBA) — Australia’s central bank — released a white paper detailing the minting and issuance of an Australian CBDC, called the eAUD, which would be issued as a liability to the RBA. The pilot project is set to commence in 2023.

Related: Bitcoin is the king of crypto brand awareness for Aussies: Report

The report aims to help the government regulate the sector in a way that enables innovation while protecting consumers, and follows a promise from a spokesperson of Australian Treasurer Jim Chalmers — prompted by the downfall of FTX — that regulations would be coming in 2023 which aim to protect investors while still promoting innovation.

According to a Nov. 14 report from the Australian Financial Review (AFR), 30,000 Australian investors and 132 companies have funds locked up with FTX.