Australia FinTech Groups Advocate State-Sponsored Cryptocurrency

On October 16, 2017, reports emerged that indicate the Reserve Bank of Australia and the federal Treasury have received submissions from three FinTech firms in an attempt to establish a necessity for a state-backed national cryptocurrency.

FinTech companies AgriDigital, FlashFX, and Othera presented use cases to industry-facing organization FinTech Australia and the government-backed FinTech Advisory Group in support of a digital Australian dollar (DAD). According to FinTech Australia’s chief executive, Danielle Szetho, a move into cryptocurrency by the Australian government would be a stride forward. He said, "The Digital Australian Dollar would be a huge step to grow our vibrant blockchain and digital currencies industry."

Szetho added:

"Having key stakeholders like the RBA involved in further explorations of an Australian digital currency will help build trust and usage of cryptocurrencies, but at the same time will ensure we do not undermine Australia's currency stability and sound monetary policy."

One cryptocurrency advocate, FlashFX, is licensed to utilize blockchain technology for international money transfer. Chief enabling officer and co-founder Nicolas Steiger told ETHNews, “We are converting fiat AUD and making it tradeable on [the Ripple network] by issuing an AUDflashfx. That’s opposed to an AUDrba in the fiat world.”

Steiger believes that a state-sponsored coin would go a long way toward bolstering the public's faith in a cryptocurrency.

"A government-endorsed digital Australian dollar has the potential to lead to increased trust and certainty, particularly to grow the digital currency marketplace," said Steiger, adding, "It would also stop multiple private parties creating a confusing array of 'Australian dollars' with no official backing."

Another use case submission came from AgriDigital, which makes agrarian transactions between farms and consumers possible via blockchain technology. However, those transactions are handled with fiat currency because of the limiting factors of volatility and general wariness of cryptocurrencies that is felt by participants. AgriDigital co-founder Emma Watson said that government backing would bridge the gap to enable payments with the cryptocurrency. "A centrally issued Digital Australian Dollar, backed by fiat [physical] currency, would enable payments to be made between participants in real time and 24/7 along the supply chain," said Watson.

Othera, the third to submit a DAD use case, uses a blockchain platform to manage various aspects of digital loan contracts. According to chief executive John Pellew, an official DAD for payments on the blockchain system would allow automated tracking of records on an immutable ledger and enable a full audit trail. He said:

"Currently to make our technology work we are forced to integrate back into the legacy payment rails of the banking system in order to facilitate and process repayments from borrowers and then forward payments on to the token holders ... This is a slow and expensive process and does not utilise the built-in capability of the blockchain smart contracts to auto process these repayments … A DAD would unlock the full potential of our blockchain and smart contract technology."

In July of 2017 Australian legislators rescinded a double tax that had been previously imposed on digital currencies. Likewise, in the following August of 2017, a bipartisan effort lead by Labor senator Sam Dastyari and Liberal senator Jane Hume called upon the RBA to develop blockchain technology to compete with low-cost goods and services from nearby Asian countries.

If the petitions are well received, Australia may join the ranks of a growing global community that is pursuing nationalized cryptocurrencies, which includes Russia, China, Japan, Estonia, and others.