Australia has made significant strides in the blockchain space already in 2020, previously announcing a roadmap for a vibrant blockchain sector that the country hopes to achieve via a combination of banking, export, and education infrastructure changes. Additionally, the National Stock Exchange of Australia is building a blockchain-based settlement and clearing system—in partnership with financial tech (fintech) company iSignthis—that could also enable fractional trading in the process.
Word of both of those plans has reached the Australian Senate’s Select Committee on Financial Technology and Regulatory Technology, which released an interim report that includes numerous references to blockchain.
The Senate Committee’s report lays out the potential for blockchain to power advances in both fintech and regulatory tech (regtech). It also highlights what could be a missed opportunity so far: reaping the myriad benefits of capital raised via initial coin offerings (ICOs).
The report notes the same figures stated in the February National Blockchain Roadmap announcement, citing an expectation that blockchain technology will drive $175 billion in global business value by 2025 and more than $3 trillion total by 2030.
Michael Bacina, partner at commercial law firm Piper Alderman, spoke of the expected rise in demand for blockchain tech within Australian industry. “Most fintech and regtech projects will either be built predominantly on distributed ledger technology or blockchain, or heavily using that within the next 10 years,” he told the Committee.
Furthermore, the Committee noted that blockchain technology could benefit a wide number of Australian industries. While the financial and insurance industries topped the list, others include “professional, scientific, and technical services and retail trade, but other areas include healthcare and social assistance, agriculture, as well as real estate services,” the report reads.
Improving ICO conditions
Elsewhere in the report, the Senate Committee focused on the rise in ICOs and the capital they raise—and why Australia isn’t reaping more of the benefits of them.
Dr. Jemma Green, co-founder and Executive Chairman of blockchain-driven Australian energy marketplace Power Ledger, suggested to the Committee that current regulatory conditions in the country are not conducive to attracting startup ICOs.
“Many countries—for example, Switzerland—are changing that to put them on capital accounts, which is moving the taxing point to when proceeds build a platform which generates income,” she said of pertinent laws affecting ICOs. “In Australia, the proceeds are presently being taxed as income. As a result of this regulation, Australia is not an attractive proposition to undertake one of these initial coin offerings or indeed set up a business here.”
She told the Committee that less than 1% of the $26 billion in estimated ICO capital raised to date internationally has been from Australian companies, and that there is multifaceted incentive for the country to change its laws to be more inviting to companies that would utilize ICOs.
“From an employment perspective, it’s a really exciting story. And then the taxation revenue from those companies that come in profitable will be the bounty for the Treasury,” she explained. “And so I think there’s a bigger play around capturing the value for those markets in the Australian economy, as opposed to them being based outside Australia. It’s stimulating the fintech sector, providing employment opportunities, and delivering better quality services to the Australian people.”