The Australian Government has unveiled an ambitious comprehensive strategy to regulate and incorporate digital assets into the wider economy, drawing inspiration from initiatives in the European Union and Singapore.
In a recently released white paper from the Australian Treasury, the government expresses its intention to adopt tokenization, real-world assets (RWAs), and central bank digital currencies (CBDCs) as part of a broader effort to update its financial infrastructure.
Although a retail CBDC has been dismissed for the time being, the government views a wholesale CBDC model and a tokenized settlement system as essential for enhancing market efficiency and expanding access to various assets.
The Australian Treasury, alongside the Australian Securities and Investment Commission and the Reserve Bank of Australia, plans to initiate pilot trials that utilize tokenized currencies, such as stablecoins, to facilitate transactions within wholesale tokenized markets.
“Markets for tokenized assets could potentially boost automation, decrease settlement risks, reduce dependence on multiple financial intermediaries, streamline trading operations, lower transaction costs, and broaden access to traditionally illiquid assets,” states the report.
The white paper also outlines a regulatory framework for cryptocurrency exchanges, to be referred to in Australia as Digital Asset Platforms (DAPs).
Operators of DAPs will be required to adhere to financial services regulations, including capital adequacy and disclosure standards, while also engaging third-party custodians for the safekeeping of customer assets.
The government aims to tackle industry concerns regarding de-banking through its DAP licensing process, enabling banking partners to more effectively manage risk.
This initiative to prevent de-banking in Australia coincides with ongoing U.S. hearings on the matter, where Senator Tim Scott’s FIRM Act seeks to restrict regulators from leveraging “reputational risk” as a means to exclude crypto firms from banking services.