Ultimate Resource On Australia’s Involvement With Bitcoin
Australian Bitcoin-focused data center business Iris Energy has doubled a fundraising round to A$40 million ($31 million) ahead of a planned initial public offering. Ultimate Resource On Australia’s Involvement With Bitcoin
Iris expanded the offering on Wednesday following a A$13 million commitment from Platinum Asset Management, according to a letter to investors obtained by Bloomberg News.
The firm had originally set a A$20 million target for its second pre-IPO fundraising. The company is planning its first-time share sale in the middle of this year.
Separately, the company told investors that Jason Conroy, chief financial officer of energy utility Transgrid, was set to become Iris’ new chief executive officer.
He will be joined by David Bartholomew, who will be the company’s independent chair. The two previously worked together for close to a decade at Australian gas pipelines company DUET Group.
Proceeds from the fundraising will be used to build a 50 megawatt data center in British Columbia, Canada, adding to an already-funded 30 megawatt project.
An external representative for the company declined to comment.
Australian Crypto And Remittance Businesses Face ‘Debanking,’ Senate Committee Hears
Australian banks stand accused of engaging in “anti-competitive” behavior by denying their services to local crypto businesses.
An Australian Senate Committee has heard several cases of financial institutions denying or terminating banking services to local cryptocurrency and remittance businesses.
In the Senate Select Committee on “Australia as a Technology and Financial Centre” held Wednesday, two crypto exchanges, Aus Merchant and Bitcoin Babe, testified to their repeated denial of services, often with no explanation given by the institutions that denied them.
The purpose of the committee is to review the federal policy framework around cryptocurrency and blockchain technology in the country, among broader issues within the fintech industry.
Michael Minassian, regional head of global payments firm Nium, testified that Australia was the only country of 41 others to have denied banking for Nium’s remittance services.
Bitcoin Babe founder Michaela Juric told the committee her banking services had been terminated 91 times over the course of her small business’ seven-year history.
The committee also heard that Juric and family members had been denied personal banking services, which impacted their ability to establish basic utilities such as an internet service, water and electricity, as well as self-managed retirement funds and insurance.
Juric said little to no reason had been given for the “debanking” and that banks were being “anti-competitive” because they “didn’t like that there was this competition coming through that bitcoin and other cryptocurrencies posed.”
In her submission to the committee, Juric said there was “no opportunity for discussion” over her losing services from some of the country’s largest banks including Commonwealth (CBA), Westpac and Bank of Queensland.
Losing services from CBA was “particularly hurtful” to Juric, according to her submission to the committee. Juric said she was also personally debanked from all CBA accounts, which included an account Juric had held since five years old. Juric claims she is no longer able to access any bank account records or open an account with CBA.
Aus Merchant’s managing director, Mitchell Travers, provided evidence to the committee showing he had lost banking services on four occasions.
“As far as I am aware, it was a risk-avoidance, risk-off attitude,” Travers said. “The reasoning was that we were outside the scope of services for these banks and we weren’t given an opportunity to provide enhanced due diligence procedures.”
Sen. Andrew Bragg asked Travers if he thought the banks considered his company’s registration by the country’s financial watchdog Austrac to be worthless.
“Yes, that’s correct,” said Travers. Juric also said her Austrac registration was never brought up by the banks.
It’s troubling to hear about the personal impact of de-banking on people trying to set up a small business. The banks have said the driver of de-banking is the lack of a regulatory framework for digital assets. That’s what we must fix and we will hold the banks to that.
— Senator Andrew Bragg (@ajamesbragg) September 8, 2021
Bragg said the banks had told him the reason for debanking crypto businesses was due to a “lack or low level of regulation” within the industry and asked whether increasing regulation for crypto markets would make the banks more willing to work with crypto firms.
“Sure, that’s a possibility,” said Juric. However, she also warned of the potential for big banks to threaten small crypto businesses and put them out of business.
Travers Agreed: “Increased regulation on the custody side is very important.”
Afterpay Tells Senate Inquiry Crypto Could Slash Merchant Payment Costs
Afterpay told the Australian Senate that using crypto could cut payments costs for merchants and that the government should work to create a framework for an AUD-backed stablecoin.
Australian buy now pay later (BNPL) firm Afterpay believes that local merchants can slash payment costs by utilizing cryptocurrencies.
In a submission to the Senate inquiry into “Australia as a Technology and Financial Center,” Afterpay stated that the use of blockchain-based transactions could cut the fees associated with traditional payment methods, including card issuer, network operator and banking fees:
“Merchants stand to benefit considerably from the cryptocurrency model, as card network fees are entirely removed from the equation and the customer/payer bears the transaction costs.”
Under the crypto model, the customer would front the cost of validating the payment on the blockchain. This could either be relatively cheap or costly depending on what cryptocurrency and blockchain the transaction is conducted with or how congested a network is at any given time.
If such a scenario were to play out, Afterpay stated that transaction fees would be transparent, and customers would be granted the choice to “wait for more favorable network conditions and a lower cost” before making transactions.
The inquiry is investigating a broad range of factors related to financial technology, such as the economic and employment opportunities posed by crypto and blockchain tech, barriers to the uptake of new technologies, and the impact of corporate law “restraining new investment” in Australia. Afterpay will be speaking before the Senate committee later on Wednesday.
While BNPL competitor Zip has outlined plans to offer crypto trading services for its Australian and United States-based customers, Afterpay is yet to reveal any plans to work with digital assets. However, crypto-friendly payments firm Square acquired Afterpay in a $29-billion stock deal announced on Aug. 1, which could see the firm enter the space in the future.
In its submission to the Senate, Afterpay noted that it “does not currently offer crypto-related products” but is actively “considering” how innovative fintech features could function as a part of the alternative financial platform.
Stablecoins Down Under
On the topic of stablecoins, Afterpay emphasized that the Australian government should work with the crypto sector to consider what “framework an optimal environment for an AUD-backed stablecoin should look like.”
According to Afterpay, the objective should be to provide stablecoin users with protections concerning the asset but regulate it in a way that doesn’t stifle fintech innovation in Australia.
“This includes considering if regulatory instruments are required for stablecoin issuers to have transparent and adequate prudential reserve holdings, consumer-focused data protections and fair and appealable processes in place regarding account blacklisting,” it said.
Afterpay ‘Absolutely’ Keen To Explore Crypto Services After Regulations Clarified
Afterpay spoke as part of the Senate inquiry into “Australia as a Technology and Financial Center” and Lee Hatton said there would be enough consumer demand to offer crypto services.
Australian buy now pay later (BNPL) giant Afterpay — now part of Jack Dorsey’s Square — has said that it is likely to pursue cryptocurrency services once the regulatory framework is clear.
Following Afterpay’s submission to the Senate inquiry into “Australia as a Technology and Financial Center,” which posited that merchants could slash payment costs by utilizing cryptocurrencies, representatives spoke to the inquiry on Sept. 8.
Afterpay’s vice president for public policy and communications Damian Kassabgi said that “this idea of being able to exchange currencies from person to person or to a merchant without going through the traditional rails could create a lot of efficiencies.”
Crypto-friendly Liberal senator Andrew Bragg asked if Afterpay had plans to offer crypto services in the future. Lee Hatton, the executive vice president at Afterpay, responded that once the regulatory path was clear, the firm would be likely to meet its customers’ demand for crypto services:
“Once we’re able to understand the regulatory framework in this space, we can absolutely see where our customers are going. And it would seem to us that they are going to want to participate in this way.”
“We will absolutely see a part of our customers starting to leverage [Bitcoin] and we would absolutely be looking for a way to support them to do that,” she added.
The regulatory landscape of crypto in Australia remains unclear as the government is yet to put a detailed framework in place. Bragg urged the government back in May to “stay ahead of the game” by introducing regulations to protect consumers and foster innovation.
The discussion moved on to stablecoins, with Kassabgi emphasizing the significance of using an Australian dollar (AUD) backed stablecoin for payments between consumers and merchants.
“It is not hard to imagine a world where a privately issued stablecoin that is pegged to the Australian dollar, one that passes from consumer-to-consumer or consumer-to-merchant with very little friction where the traditional payment rails are not used, where interchange fees are close to non-existent, and where there is no commercial bank as an intermediary,” he said.
“There are many benefits to this future outlook. However, there is work to be done to create a safe and efficient regulatory environment,” he added.
Australian Crypto Businesses Tell Senate Inquiry About Being De-Banked Up To 91 Times
Speaking on a panel as part of the Senate inquiry into “Australia as a Technology and Financial Centre,” three crypto firms outlined their de-banking experience in Australia.
Crypto-related companies and figures have provided evidence about being de-banked by Australian financial institutions to a Senate inquiry.
Crypto investment firm Aus Merchant, global remittance provider Nium and small peer-to-peer crypto brokerage platform Bitcoin Babe were speaking on a panel as part of the Senate inquiry into “Australia as a Technology and Financial Centre” on Wednesday.
All three are registered with financial intelligence regulator AUSTRAC and are subject to reporting requirements; however, they all echoed similar sentiments of being de-banked without a concrete explanation as to why.
Michaela Juric, the founder of the peer-to-peer trading business dubbed after her nickname “Bitcoin Babe,” stated that she has been banned by a total of 91 banks and financial institutions throughout her seven-year history in crypto:
“As of yesterday, I have been banned and de-banked from 91 banks and financial institutions. That’s 91-lifetime bans. No reasons given, no case-by-case assessments or discussions engaged and no recourse available.”
At today’s Senate hearings on crypto regulation, the session opens with @ausfintech providing testimony on #debanking: CEO says there is no area within fintech suffering more from this than the crypto sector, saying “Australia will be left behind”
— chloe white (@ChloeWhiteAus) September 7, 2021
Bitcoin Babe utilizes exchanges such as Local Bitcoins to conduct trades in Australia, and according to her profile on the website, she has conducted more than 40,000 trades since 2014 with a feedback score of 98%.
Despite holding a good reputation online, Juric told crypto-friendly Senator Andrew Bragg that some banks have even flagged her as a terrorist due to the nature of her business:
“I’ve had banks go as far as report me as being like a terrorist on some databases, and that’s what stopped me from being able to get some of these services.”
It’s troubling to hear about the personal impact of de-banking on people trying to set up a small business. The banks have said the driver of de-banking is the lack of a regulatory framework for digital assets. That’s what we must fix and we will hold the banks to that.
— Senator Andrew Bragg (@ajamesbragg) September 8, 2021
Singapore-headquartered Nium is licensed in 40 markets across the globe; however, the firm stated that Australia is the only country where it has had issues with financial service providers.
Michael Minassian, Asia-Pacific head of consumer business at Nium, stated the firm feels that there are some “uncompetitive practices” that are being conducted with de-banking, as he questioned the “opaque” reasons that banks have offered when cutting services to the company:
“They’re very vague as to why they are ceasing to provide banking services to you. I’ve had some bankers provide me with verbal reasons as the policy shifts within the bank etc, but essentially industries like remittance become too hard for the banks.”
“It’s costly for them to try and establish frameworks that they can allow banking, so it’s just easier for them to to to cease providing services,” he added.
Mitchell Travers, a co-founder of New South Wales-based crypto investment platform Aus Merchant, stated that with what little reasoning was provided behind de-banking the platform, it was due to “risk avoidance” from banks.
“As far as I’m aware, it was a risk avoidance, risk-off attitude where the reasoning was that we were outside of the scope of services for these banks, and we werent given an opportunity to provide enhanced due diligence procedures,” he said.
Senator Bragg responded by stating, “Okay, I see your registration with AUSTRAC is worthless to a bank, it sounds like.”
The Commonwealth Bank (CBA) provided a submission to the inquiry explaining its practices and stated that it operates “commensurate systems and controls to mitigate and manage” Anti-Money Laundering and terror financing risk.
“In circumstances where a customer’s source of funds and source of wealth is unable to be determined, or their account activity is not in accordance with known business activities, the group takes appropriate steps to mitigate and manage its ML/TF risk,” The CBA said in its submission.
Australian Crypto Exchange Head Welcomes Industry Regulation
Australia risks being left behind if regulation of the local cryptocurrency industry doesn’t support innovation, according to the head of the nation’s largest digital asset exchange.
It would be a “real shame for Australia if we don’t take this bull by the horns,” BTC Markets Chief Executive Officer Caroline Bowler said in a Bloomberg Television interview Wednesday.
Australia would benefit from a “progressive framework of regulation,” she said, and praised the approach in the European Union, which has moved to “regulate innovation in, rather than innovation out.” Bowler also welcomed the approach of regulators in Singapore for embracing the crypto industry.
She contrasted the EU’s stance with that of the U.S. Securities and Exchange Commission. Since taking over as SEC chief in April, Gary Gensler has taken a hard line on crypto exchanges and said Tuesday there are only a “small number” of digital assets that don’t need to be registered with the commission.
“There is a concern naturally that regulation can become overbearing,” Bowler said. But citing a BTC Markets survey, she said investors note a lack of regulation in the Australian market. Financial advisers should be allowed to give advice on crypto assets to help investors navigate volatility in the market, Bowler said.
Regulation of the industry is welcome, said Bowler, and there is a “certain sense of optimism” around a report on the issue due to be presented in October by a parliamentary committee.
Zip Eyes Millennials With Planned Launch Of Crypto Trading In The US Next Year
Aussie “buy now, pay later” fintech found that BNPL users are 67% more likely to trade crypto than non-users.
Australian “buy now, pay later” (BNPL) firm Zip, the smaller rival to Square’s recently-acquired Afterpay, is hitching its future growth prospects to the cryptocurrency industry.
Zip USA CEO Brad Lindenberg told attendees at the company’s first retail investor day that “The innovation around crypto feels like the internet did in 1995.”
The company’s interest in crypto has been hinted at previously and has now materialized into a concrete plan: A project that integrates crypto trading functionality for United States users and enables its merchants to accept Bitcoin (BTC) payments.
Zip’s internal research, which found that BNPL users are 67% more likely to trade crypto than non-users, has bolstered its confidence in the move. Lindenberg, moreover, pitched crypto integration as a natural next step for a company seeking to cater to what he dubbed the “Millennial finance diet.”
Zip’s co-founder Peter Gray had told reporters earlier this summer that support for crypto trading and providing a digital wallet were among the top requests from Zip users, hinting that the firm understands its “younger generation of customers” and would roll out products and services targeted at them.
Alongside crypto trading functionality and merchant support for BTC payments, Zip also plans to launch a “BitcoinBack” feature in 2022 to allow its customers to convert cash rewards into BTC. All these offerings are slated for the U.S. launch in 2022, but will eventually expand to a total of 12 global markets, including Zip’s home turf in Australia, over the next 12–18 months.
As reported just last week, AfterPay, itself, has signaled it is likely to pursue crypto services once the regulatory framework in Australia is more transparent. The BNPL pioneer advised a Senate inquiry into “Australia as a Technology and Financial Center” that merchants could slash payment costs by using crypto and that sidestepping traditional rails could create significant efficiencies.
There’s A Bitcoin Boom Among Baby Boomers, Reports BTC Markets
Crypto asset investing has become more popular with Aussie boomers, according to the country’s largest exchange.
Australian cryptocurrency exchange BTC Markets has observed a significant uptick in older clients using its platform over the past financial year.
More older Australians are viewing crypto assets as viable investments, according to data provided by one of the country’s oldest and largest exchanges.
In its annual “Investor Report,” BTC Markets, which started in 2013, reported a 15% increase in the number of investors over 65. The report also indicates that they are the group making the largest deposits.
Baby Boomers, which are classified as those born between 1946 and 1964, now compose 5% of the platform’s estimated 325,000 customer base.
BTC Markets CEO Caroline Bowler proclaimed that “young male traders have relinquished their monopoly on crypto,” as the boomer growth figure was the second-highest after the 18 to 24 age range.
More than a quarter of the exchange’s customers are investors over the age of 44, and they have more money to invest. The platform reported that the over-65 demographic had the highest average initial deposit of $3,200 and an average crypto portfolio size of $3,700.
Bowler added that low-interest rates are a key factor behind boomers looking toward alternative investments, such as crypto assets, before adding:
“These Baby Boomers are often at a time in their lives when they have accumulated significant wealth and assets and have many years of experience investing in financial markets. They are not worried about allocating a small percentage of their portfolios to cryptocurrencies.”
Younger traders in the Generation Z category aged 18 to 24 had far smaller initial deposits and portfolios, around a quarter of their senior counterparts.
The exchange surveyed 1,800 clients to ascertain their motives for investing in crypto. It discovered that 34% of those surveyed were seeking early retirement, 28% portfolio diversification, and 23% fear of missing out (FOMO).
Speaking to Bloomberg Crypto on Wednesday, Bowler said that the firm has been looking at the Singaporean model of embracing the community as well as the regulatory challenges for the crypto industry.
She said that 28% of Australians said that one of the biggest challenges they face is the lack of regulation locally. This has a knock-on effect since financial advisors are not allowed to advise on crypto asset investing, which would help investors mitigate risk.
.@CaroBowler, head of the Australia’s largest digital asset exchange BTC Markets, discusses the adoption of regulatory oversight.
— Bloomberg Crypto (@crypto) September 15, 2021
France Calls U.S.-Australia Submarine Deal A Betrayal
French Foreign Minister Jean-Yves Le Drian calls U.S. move to step in a ‘stab in the back’.
France said it had been betrayed by the U.S. after being pushed out of a multibillion-dollar deal to supply submarines to Australia, in a public rupture between NATO allies that is shaping up to be among the most bitter trans-Atlantic disputes of the Biden administration’s first year.
French Foreign Minister Jean-Yves Le Drian on Thursday called the U.S.-backed deal a “stab in the back.” President Biden on Wednesday announced a new security pact with Australia and the U.K. that would include a long-term agreement to build nuclear submarines for Australia. Australia on Thursday confirmed it was withdrawing from the French contract.
“This brutal, unilateral and unpredictable decision reminds me a lot of what Mr. Trump used to do,” Mr. Le Drian said. “I am angry and bitter. This isn’t done between allies.”
France was so infuriated that it canceled a gala scheduled for Friday evening at its embassy in Washington and on a French ship in Baltimore to celebrate the 240th anniversary of the Battle of the Capes, when the French navy, fighting on the side of American revolutionary forces, defeated the British navy in Chesapeake Bay.
Chinese officials reacted with alarm to the prospect of a military power in the region equipped with nuclear submarines. Relations between Australia and China have deteriorated in recent years amid a flurry of economic and political disputes.
“The nuclear submarine cooperation between the U.S., the U.K. and Australia has seriously undermined regional peace and stability, intensified the arms race and undermined international nonproliferation efforts,” said Zhao Lijun, a spokesman for the Chinese foreign ministry.
The global fallout from the U.S.-led submarine pact underscores how Western powers are jockeying for influence in Asia-Pacific, both against each other and their common antagonist China.
The U.S. and France, two of the world’s largest weapons exporters, secure lucrative military contracts through their security partnerships in the region. The new pact signals that Washington refused to take a back seat to France in arming Australia, long one of the closest U.S. allies.
The trans-Atlantic fight stands out from Mr. Biden’s first months in office, when he worked to dial down tensions with the European Union on issues ranging from trade to climate change where the bloc had clashed with President Trump.
It comes just weeks after European capitals criticized Mr. Biden’s withdrawal of U.S. forces from Afghanistan, which left hundreds of Europeans and their Afghan allies stuck in Kabul.
News of the ruptured contract landed as the EU laid out its plans to deepen its influence in Asia, including a beefed-up security and naval presence designed to ensure freedom of navigation in the South China Sea.
The new strategy aims to respond to China’s growing assertiveness in the region by working with democratic partners like the U.S., Japan, India and Australia.
In addition to seeking an enhanced naval presence in Asia, the EU is planning to pump new funds into regional projects to provide alternatives to China’s Belt and Road initiative.
As the EU’s premier naval power, France is key to the new strategy. On Thursday, Mr. Le Drian said France’s plans to build a coalition in the region against China, including India and Australia, were shaken by the decision to step away from the contract.
“We established a relation of confidence with Australia. This confidence is betrayed,” he said.
In losing the contract, France ran up against decades of particularly close security cooperation between the U.S., Australia and the U.K. The governments share intelligence under an agreement called Five Eyes that doesn’t include France.
Until now, the U.S. has only shared its nuclear submarine technology with the U.K. Britain deployed its first nuclear submarine 60 years ago and has advanced technological expertise it can bring to the partnership. A U.K. government spokesman said the submarine deal would result in tens of billions of pounds of new investment across the country. Such deals have become far more important for the U.K. since it left the EU last year.
U.K. Prime Minister Boris Johnson said the deal wouldn’t weaken its ties with France.
“Our relationship with France, our military relationship with France is…rock solid,” Mr. Johnson said.
The Australian submarine deal, dubbed the “contract of the century” in French media, was signed in 2016 and worth tens of billions of dollars over the coming decades. The contract called for France to build nonnuclear submarines for Australia and transfer some of that technology. Australian engineers were already working in the shipyards of Cherbourg in the north of France.
Australia began to have second thoughts about the contract in recent months. Nuclear submarines can run for decades without refueling, giving them a much longer range than conventional submarines, which are powered by diesel.
Australian Prime Minister Scott Morrison said he had raised concerns with French President Emmanuel Macron at a dinner in June about whether conventional submarines would be able to address heightened security tensions in the Asia-Pacific region and China’s more assertive military posture. French and Australian foreign and defense ministers met two weeks ago and reaffirmed their defense ties and cooperation.
‘The decision … is not a change of mind, it’s a change of need.”
— Australian Prime Minister Scott Morrison
When Australia selected French military shipbuilder DCNS Group in 2016, building and operating a nuclear-powered submarine wasn’t an option, Mr. Morrison said.
“The decision we have made to not continue with the Attack class submarine and to go down this path is not a change of mind, it’s a change of need,” said Mr. Morrison.
Beijing describes actions that are increasingly troubling to the U.S. and other countries as normal defense of its own territorial integrity. China has boosted investments in its military technology with weaponry like new submarines and set territorial policies like an air exclusion zone that requires foreign aircraft to identify themselves.
Since the Biden administration came into office, the EU and the U.S. have moved to strengthen coordination on the challenges China poses, developing a top-level Transatlantic Dialogue on China and setting up a trade and technology council to help Europe and the U.S. better compete with China in developing and protecting critical and emerging technologies.
French Fume At U.S. For Cutting Them Out Of Submarine Deal
France’s top diplomat unleashed a stream of invective against President Joe Biden after the U.S. and the U.K. announced a new security alliance for the Pacific region that will cost the French defense industry some A$90 billion ($65.7 billion).
Foreign Minister Jean-Yves Le Drian told France Info Thursday that he felt “stabbed in the back” over the “unacceptable” deal that will hurt French business and shuts the French military out of a key initiative in Western efforts to build a bulwark against China.
“This unilateral, brutal, unforeseeable decision really looks like what Mr. Trump was doing,” Le Drian said. “This move is unacceptable between allies who want to develop a structured Indo-Pacific partnership.”
French President Emmanuel Macron said he would discuss the situation in the Indo-Pacific with German Chancellor Angela Merkel during a dinner Thursday in Paris.
White House Press Secretary Jen Psaki said Thursday that the U.S. cooperates with France and shares a range of priorities in the Indo-Pacific region.
“We value our relationship and our partnership with France on a variety of issues facing the global community, whether it’s economic growth, or whether it’s the fight against COVID, or addressing security throughout the world,” Psaki said.
It’s up to Australia to describe “why they pursued this technology from the United States,” she said.
French officials were blindsided on Wednesday night when the U.S. and the U.K. announced a new security partnership to supply Australia with nuclear-powered submarines, beefing up their ability to deploy in China’s backyard. That agreement scuppered a 2016 deal that Australia sealed with France to acquire 12 diesel-powered subs from shipbuilder Naval Group.
The snub is a personal blow for Macron, who hosted Australian Prime Minister Scott Morrison at the Elysee palace in June and vaunted their friendship at the Group of Seven meeting in the U.K. the same month. Le Drian had described the French-Australian submarine contract as the deal of the century.
Le Drian said he’ll be seeking explanations from the Australians over how they plan to exit their contractual obligations to Naval Group, though he didn’t explicitly call for financial compensation.
It also exposes the gulf between Paris and Washington since Biden took office. Macron has criticized the manner of the U.S. withdrawal from Afghanistan and questioned the efficiency of Biden’s suggestion of a patent waiver for Covid vaccines.
Le Drian said on Wednesday night that the submarine alliance highlights the need for the European Union to pursue its own “strategic autonomy,” meaning a capability to act independently of the U.S.
Macron, speaking to reporters alongside Merkel, said they’d discuss areas “that call for European coherence, our working together and the defense of true European autonomy,” including in the Indo-Pacific region.
The snub for France coincides with a European effort to cast the EU and Indo-Pacific countries as “natural partners,” according to a European Commission strategy paper adopted Thursday. Among the goals is completing trade talks with Australia.
France is the only European nation with a significant military presence in the region and it also has an overseas territory, New Caledonia, east of Australia.
Le Drian said that Naval Group, which is mostly state-owned, had met its commitments under the Australian contract. Thales SA, another state-owned company which has a stake in Naval Group and was due to supply defense systems for the submarines, said its financial forecasts wouldn’t be impacted by the breakup. A person familiar with the matter said no job cuts are expected for Naval Group as a result of the decision.
Average Aussie Crypto Portfolio Grew 258% In FY 20–21, Survey Reveals
Older Australian crypto investors outweigh the new generation in initial investment, but the younger crowd is more active in daily trading.
The average portfolio size on Australian cryptocurrency exchange BTC Markets has grown from $577.65 (795.5 AUD) to $2,069.16 (2849.5 AUD) in the financial year 2021, signaling a 258.2% increase in portfolio holdings, according to exchange data compiled by Statista on a recent BTC Markets survey.
Data on the survey shows that the average portfolio size of female and male investors in fiscal 20–21 on BTC Markets was $1,924.30 (2,650 AUD) and $2,214.03 (3,049 AUD), respectively. However, in 2020, the average portfolio size of female Aussie investors exceeded male investors slightly.
Transaction data on the exchange also showed a pattern of investment demand increasing with aging. Considering the data provided by BTC Market on Australia’s average initial investment, investors above 65 years old have invested roughly $3,158.03, the highest of all demographics.
Following an incremental reduction across the various age groups, the youngest cryptocurrency traders, ranging from 18 to 24 years, tend to make comparatively small investments, standing at $792.96 on average. While older Australian crypto investors outweigh the new generation in initial investment, the younger crowd shows comparatively more activity in terms of daily trades.
Resonating the findings above, a September report from financial comparison website Finder shows that one in six Australians own cryptocurrencies, amounting to $8 billion in total investment. The report suggests that, like many other users in advanced industrialized countries, Australians are increasingly viewing cryptocurrencies as a new asset class.
According to Cointelegraph’s report on the matter, Bitcoin (BTC) is the most popular cryptocurrency for the Australian crypto market and is held by 9% of investors. Other popular investments include Ether (ETH), Dogecoin (DOGE) and Bitcoin Cash (BCH).
The report showed that, despite the growth in crypto investments, a significant barrier to entry for Australians is the difficulty in understanding crypto and the risks related to volatility.
ANZ Bank Settles Debanking Case With Aussie Bitcoin Trader
Allan Flynn won a settlement with ANZ for debanking him and is headed to the tribunal to take on Westpac next week.
Bitcoiner Allan Flynn has settled his first complaint with the Australia and New Zealand Banking Group (ANZ) over being unilaterally debanked in 2018 and 2019 due to his occupation as a Digital Currency Exchange (DCE).
The settlement comes 20 months after the Canberra resident first filed complaints with the ACT Civil and Administrative Tribunal against ANZ.
In the settlement, the ANZ noted that it closed his accounts due to the risk of money laundering and terrorism funding (ML/TF) that it perceives among exchanges. It also acknowledged that the act of unbanking Flynn could “have amounted to unlawful discrimination contrary to sections 7(1)(p) and 20 of the Discrimination Act 1991.”
However, ANZ denied any liability saying that if it had “discriminated against Mr. Flynn by closing his accounts, that discrimination was reasonable in the circumstances and thus lawful.”
The statement by the ANZ also admitted that it closed his account upon detecting DCE activity without contacting Flynn for further information about his activities. Flynn argues that such discrimination is unlawful per Canberra law which states that, “It is against the law for someone to discriminate against you because of your profession, trade, occupation or calling.”
Although this first battle is complete, he will take Westpac bank to the tribunal next Thursday over a second complaint.
Westpac closed his bank account in 2019 citing the same ML/TF concerns over him being a crypto trader.
Flynn told Cointelegraph the case was an important one as it will be the first time banks will be forced to say definitively whether they will serve Bitcoin traders. “All I’m asking for is a fair go,” he said.
Flynn plans to cite human rights violations by banks for discriminating against him and his occupation. He feels that this is the right path to take over calling for more regulations and hopes that a win could force policy changes nationwide or perhaps even internationally.
“A win against the banks could have wider implications for discrimination against occupations.”
He said that a ruling by the Tribunal will enjoy widespread public scrutiny, while a settlement beforehand could help change policy due to a partial admission of guilt. He worries, however, that a loss could see more Bitcoiners unbanked.
His case is far from unique. Just last month, Rebecca Schot-Guppy, the CEO of Fintech Australia told the Senate that up to 91 members of her organization had been debanked without apparent cause or means to appeal.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has issued increasingly specific regulations since 2015 about how DCEs must operate and be treated by the law.
Importantly, AUSTRAC has made it clear that the AML/counter-terrorism laws do not obligate banks to close the accounts of crypto traders.
Australia Has Third-Highest Rate of Crypto Adoption In The World
Almost 18% of the country’s population owns crypto.
Australia is more bullish on cryptocurrencies than most other countries around the world, according to a survey published by comparison site Finder on Sunday.
The survey, based on the site’s Cryptocurrency Adoption Index, measures the growth of crypto globally through a regular survey of more than 41,600 individuals across 22 countries.
Finder’s survey found Australia has the third-highest rate of crypto ownership at 17.8%, topping such countries as Indonesia (16.7%) and the city of Hong Kong, a special administrative region of China (15.8%).
The global average is 11.4%, according to Finder’s results.
“Australian’s love to gamble,” Finder CEO Fred Schebesta told CoinDesk via Signal on Monday. “They are also super savvy in terms of finance … the laws around crypto make it super smooth to buy and sell.”
Of the nearly 1 in 5 adults in Australia who own some form of crypto, Finder found bitcoin is the most popular coin as 65.2% of Australians who own crypto own the world’s largest crypto, the fifth-highest percentage of all 22 countries surveyed.
Ethereum, meanwhile, is the second-most popular coin in the country with a share of 42.1% among those who own crypto, while cardano’s share comes in third at 26.4%.
Two other cryptos Australian crypto owners hold are dogecoin (23%) and binance coin (14.6%), according to Finder’s results.
“Banking in Australia is really smooth and super easy to withdraw and deposit,” Schebesta added. “Other countries have a lot more laws and challenges around getting your money in and out [of crypto].”
Aussie Senate Committee Proposes Overhaul Of Crypto Taxes, DAOs And Exchange Licenses
The committee recommended more clarity for DAOs, new capital gains tax provisions and tax breaks for green miners.
The Senate Committee on Australia as a Technology and Financial Center (ATFC) has just tabled its third and final report in parliament, which has 12 far-reaching recommendations for the regulation of the digital asset and fintech industry down under.
It proposes new licenses for crypto exchanges, new laws to govern decentralized autonomous organizations (DAOs), an overhaul of capital gains tax in decentralized finance (DeFi) and a tax discount for crypto miners using renewable energy.
In general, the report found that there is a need for more regulatory clarity and certainty while avoiding stifling innovation with onerous requirements.
A key recommendation is to establish a new DCE Market License for digital currency exchanges, including requirements relating to capital reserves and auditing. The requirements should be scalable so that smaller operators are not squeezed out of the market.
It also recommended the capital gains tax rules should be updated to provide more clarity around the tax treatment for crypto assets and DeFi staking. The committee suggested that unlike in the current system, capital gains tax should only be applied when cryptocurrency transactions “genuinely result in a clearly definable capital gain or loss.”
The committee also recommended that the Treasury lead a policy review of the viability of a central bank digital currency, as well as put forward a proposal for a company tax discount of 10% for crypto miners who use renewable energy.
One world-leading recommendation is to establish a new regulatory structure for DAOs, which refers to decentralized community ownership and governance of a protocol. The report states:
“DAOs do not clearly fall within any of Australia’s existing company structures. […] This regulatory uncertainty is preventing the establishment of projects of significant scale in Australia.”
Asher Tan, CEO of Australian crypto exchange CoinJar, praised committee chair Senator Andrew Bragg and the team for “the forward-thinking approach they’ve taken with this proposed regulatory framework. He said:
“In our view, the AFTC report strikes a commendably optimistic tone that sees blockchain technology as the historic innovation that it is — and one that comes with matching opportunities and risks.”
The committee heard from a range of experts and industry players, including Blockchain Australia, leading exchanges, and firms, such as R3 and Ripple. The latter recommended that any regulatory framework should use a “risk-based approach to identify digital asset services that pose sufficient risk to warrant regulation.”
Steve Vallas, CEO of Blockchain Australia, said the organization was keen to hear from stakeholders for their feedback on the recommendations.
Senator Bragg Said The Proposed Regulations Would Help Australia To Become A Leader In Digital Assets:
“The committee has recommended a comprehensive crypto framework to deliver Australian leadership. We’ll be competitive with Singapore, the U.K. and the U.S.”
The Australian Taxation Office estimated that more than 600,000 taxpayers have invested in digital assets in recent years. Independent research suggests that 17% of Australians currently own cryptocurrency.
The report concluded that a robust regulatory framework was required in order to protect consumers, promote investment in Australia, and remain competitive globally:
“The potential economic opportunities are enormous if Australia is able to create a forward-leaning environment for new and emerging digital asset products.”
Australian Senators Pushing For Country To Become The Next Crypto Hub
The Australian Senate Committee delivered a report calling for a complete overhaul of crypto legislation and licensing in the country.
On Oct. 20, the Australian Senate Committee delivered a groundbreaking report calling for a complete overhaul of crypto legislation and licensing in the country. But, will it achieve its aim of transforming Australia into an international blockchain hub and providing a model for other countries to follow?
Top-down governmental responses to innovation have always been questioned by entrepreneurs. Right now in crypto land as institutional investment flows steadily in and decentralized finance (DeFi) use cases and products have continued to flourish over the past 18 months, many crypto companies are begging for further regulatory clarity.
The original Australian Senate Select Committee on FinTech and RegTech, chaired by Senator Andrew Bragg, was established in 2019 to strengthen the regulatory environment for fintechs and regtechs in Australia.
It would quickly become known as the Bragg Inquiry and is now largely focused on crypto. Generally not regarded for its regulatory progress, Australia’s quick pivot to researching and proposing helpful rules for the crypto industry has surprised many.
Judging by the report’s heavy quoting of stakeholders, the Australian government’s October 2021 Senate inquiry final report into digital assets has attempted to truly listen to the vast concerns and aspirations of the bustling Australian crypto industry, with almost 18% of Australia’s population owning crypto.
The inquiry released its final report after six months of hearings and submissions on the topic. This timely report has received widespread industry applause.
Generating A Response
Notable recommendations include proposals for tax reform and a possible new corporate entity to be able to register decentralized autonomous organizations (DAOs) in Australia. The recommendations present an opportunity to attract jobs, investment and innovation to Australia and to retain talent.
The outcome is perhaps not surprising, given that Bragg is making his mark as a “Crypto Bro.” He participated in a July “Ask Me Anything” session on Reddit and met with crypto stakeholders. He conducted another in September, where he proclaimed:
“I am very keen on the democratic mandate of crypto — I think it has created an asset class that anyone can access.”
He seems to understand the space well, as the final report suggests Australia create DAOs as a new legal corporate vehicle. An acknowledgment that is trying not to subsume these new technologies into existing legal frameworks is contrary to Australia’s common law legal system built on precedent and legislation.
On Reddit, Bragg had tipped his hat to progressive legislation in the United States state of Wyoming: “The point here is regulatory arbitrage. We want the innovation to be legitimised through a non-stifling regulatory approach. Do you think the Wyoming DAOs are a good idea?”
So, has crypto gotten too big for the government to ignore? The report suggests the committee, composed of six members from the major political parties and an independent senator, and not just Bragg, is willing to explore new ideas and genuinely support Australia’s place as a home for crypto innovation.
The summation of the report is that Australia might legislate an encouraging regulatory regime for ambitious concepts such as DAOs and that crypto custodial services can now be conducted in Australia. Does this provide an example for less crypto-friendly countries to follow? After all, Australia has been long known for dangerous wildlife and, rarely if ever, for innovative regulation.
It could be argued that with this move, Australia is looking to position itself as a location with favorable laws, hoping to attract more business.
“Jurisdictions that provide competitive policy for decentralized technology will attract talent and investment in this space,” noted Kelsie Nabben, a Blockchain Australia board member and Cointelegraph contributor. Wyoming made DAOs a corporate entity a year ago and is now celebrated in crypto circles globally.
The industry welcomed the report but there are concerns that few in the government understand the industry well enough to adequately debate and pass the legislation. Chloe White, CEO of Genesis Block, is well known in crypto circles, having been the Australian government’s former “ambassador for blockchain.”
She Told Cointelegraph That The Government Will Need To Ramp Up Its Efforts In Order To Follow Through On Execution:
“The reforms proposed by the Senate mark a turning point. However, the government will struggle to meet the Senate’s ambitious deadline — of 12 months to legislation — if it does not liaise closely with industry experts to earn a more thorough understanding of digital assets.”
The final report — if implemented — would offer much regulatory clarity for the crypto industry. Here are some of the key recommendations that were included:
DAOs A Company Law Vehicle
Investor Telegram groups have paid considerable attention to the Australian inquiry. Notably, investors are greatly excited by the recommendation for the government to establish a new DAO company structure into corporate law. Legal personality for DAOs and limited liability for members would open the floodgates of innovation.
This Senate’s final report itself noted: “Legal liability for members (i.e. token holders) for these organisations is currently unclear, and this regulatory uncertainty is preventing the establishment of projects of significant scale in Australia.” In other words, institutional investment could now flow to major DAO-based projects.
“This is a big one. If legislated, these will be the most significant reform to corporate law in two decades,” RMIT Blockchain Innovation Hub researcher Aaron Lane noted in a press release, adding: “Providing DAO members with the option of a limited liability company structure will encourage talent and investment in Australia.”
Stop De-Banking Of Crypto Exchanges
The committee first recommended establishing a new market licensing regime for crypto exchanges since the major Australian banks have long been accused by Australian regulators and the Senate Inquiry of the anti-competitive removal of remittance payments for crypto exchanges or “de-banking,” despite being registered with the financial services watchdog Australian Transaction Reports and Analysis Centre, or AUSTRAC.
Large centralized crypto exchanges such as Independent Reserve supported the idea in their Senate submissions to the inquiry.
Further, the proposal recommended establishing “bespoke” custody or depository regime for crypto assets. Crypto asset custody under the remit of Australian regulators would act as a risk minimizer for local investors and encourage custodial businesses to be set up in Australia.
A “token mapping” exercise aimed at appropriately characterizing different crypto assets and determining if they are considered financial products that require some crypto exchanges to register for an Australian Financial Services License (AFSL) is also proposed.
This would be welcomed by many, particularly those seeking institutional investment. Australia is also particularly well-known for long established custody rules from a highly professional superannuation industry as a reference point.
One key change is to institute a new recourse for under-banked customers, which would allow customers to appeal to the banks’ decisions. Common access could also be granted to the New Payments Platform, an industry-wide payments platform for Australia, national infrastructure for fast, flexible and data rich payments in Australia controlled by a group of major banks.
This move would reduce the reliance on payments systems on the major banks since the crypto exchange industry in Australia is believed to be built on a house of cards without direct banking. Many crypto exchanges rely on two to three fintechs to bank with the Australian banking system.
If those fintechs were de-banked, then the crypto exchange industry is plausibly at risk of collapse in Australia.
Rejecting the Financial Action Task Force’s (FATF) Travel Rule.
Furthermore, the inquiry rejected the Financial Action Task Force’s (FATF) “Travel Rule.” FATF is the international body that sets standards for Anti-Money Laundering. The Travel Rule means that in transactions involving virtual assets, ordering institutions must obtain and hold Know Your Customer (KYC) information for both the sender and the receiver.
FATF currently has an extremely broad working definition regarding virtual assets and Virtual Asset Service Providers (VASPs).
The key point is that FATF considers VASPs very broadly when it comes to the purposes of the Travel Rule. Decentralized exchanges (DEXs), certain decentralized application (DApp) owners and operators, crypto escrow services and certain nonfungible tokens (NFTs) are all considered VASPs. This, is of course, unworkable for DeFi projects which are open access to anyone with a crypto wallet and do not require verification.
If crypto exchanges were overregulated under the wide FATF Travel Rule approach, this would likely stop Australia from becoming a hub of DeFi innovation. The Travel Rule is far too expansive in its description of VASPs, making enforcement very difficult for products such as high-frequency automated trading.
While this would hinder experimentation in the crypto industry, it would also send some decentralized exchanges and protocols permanently underground, as they would seek to avoid any compliance. To date, no government seems to want to enforce the Travel Rule. Perhaps everyone is waiting for the U.S. to lead on the issue.
Clearing Up The DeFi Tax Nightmare
The evolution of DeFi has made the tax treatment of cryptocurrencies increasingly problematic for the industry. While Bitcoin (BTC) and Ethereum (ETH) are currently considered capital gains tax assets and eligible for capital gains tax upon the sale, DeFi’s liquid speed presents a new problem for tax considerations.
Examples include minting and staking, along with the tax status of crypto to crypto exchanges, liquidity provider tokens and wrapped coins, which remain unclear for tax purposes.
The Bragg Inquiry recommended that capital gains tax should only be applied “when there is a clearly definable capital gain or loss” when a trade occurs. However, the threshold for triggering taxation has yet to be declared.
Also, a 10% tax discount was proposed for businesses that sourced their own renewable energy to mine cryptocurrencies and could serve as a nice touch to attract talent to Australia.
Mostly Positive Response?
Many were surprised by the support from Australia’s crypto industry. CEO at BTC Markets, Caroline Bowler, praised the recommendations saying Senator Bragg’s report not only meets our expectations of a proportionate, responsive policy change but also surpasses it in many ways: “For an industry that is moving at such a rapid pace, these pragmatic recommendations are going to give a massive leg up in putting Australia on the global fintech map.”
Tim Lea, a crypto policy activist in Sydney and the CEO of fractional funding platform, Fractonium, told Cointelegraph:
“The report is supremely intensive. If the key recommendations are taken up, it has the potential to position Australia so strongly in the global markets as a jurisdiction with a workable regulatory framework that provides Australian innovators with the clarity, certainty and flexibility to aggressively seize global market share.”
The order of the recommendations is notable and suggests that the government understood which policy levers to pull first.
Fred Pucci, a long time crypto advocate and investor, told Cointelegraph that the report reads “a bit like playing music. It makes artistic choices at every step.” DeFi, which is hard to regulate if at all, was not explicitly mentioned in recommendation one, which concerns the establishment of a market licensing regime for digital currency exchanges.
In recommendation two, custody is advised as important for investor protections but, again, no mention of DeFi or “upstairs markets,” an old term in equity for off-market trades being permitted but less transparent.
Meanwhile, “DAOs are the future and a key part of DeFi and this says that Australia wants to create a legal environment for experimentation in Recommendation 4” states Pucci. It is interesting that DAOs are considered to be ahead of the Anti-Money Laundering reform recommendations.
In short, crypto exchanges are supported front-and-center first in the recommendations, but the regulation is not over-reaching. This reflects the policy messaging throughout the 143 page report.
Devil In The Details
The report is mostly aspirational for now, but some regulatory patience may play in Australia’s favor. This area could be finalized as these proposed laws settle in the future, giving Australia time to follow other jurisdictions. The token mapping delay is sensible because tokens and assets are hard to define, as every country now knows.
Senator Bragg said he believed the recommendations struck the right balance between encouraging innovation and protecting consumers, and that he wanted the proposals legislated within 12 months.
He also suggested that his aim was to challenge other crypto-friendly jurisdictions, Singapore, the United Kingdom and the United States. “What we’ve tried to do is not use old hooks for new coats. This is a detailed report with an agenda for Australian leadership in digital assets,” he said:
“We want to be an economy which is dynamic, we don’t want to be captured by the old vested interests of yesteryear.”
Some are still reticent, recalling Australia’s regulatory track record for innovation. “This is an 8.5/10” said Pucci, “but it’s probably not going to get much better than this at the implementation stage. It still has to go through the Treasury and the rest of the political system.”
Australian Securities Regulator Issues Guidelines For Crypto ETPs
The Australian securities regulator decided not to require crypto ETF providers to hold domestic crypto custody.
The Australia Securities and Investments Commission (ASIC) has issued its response to public consultation on cryptocurrency exchange-traded products (ETPs) alongside fresh industry guidance.
On Friday, the regulator released a set of regulatory requirements for funds looking to offer crypto ETPs, including exchange-traded funds (ETFs) and structured products, following the months of industry consultation initiated in late June.
According to the official guidance, ASIC has so far greenlighted ETPs based on major cryptocurrencies like Bitcoin (BTC) and Ether (ETH) and expects more crypto assets to become a foundation for ETPs in the future:
“As at October 2021, Bitcoin and Ether appear likely to satisfy all five factors identified above to determine appropriate underlying assets for an ETP. We expect the range of non-financial product crypto-assets that can satisfy these factors will expand over time.”
“In order to become a proper basis for a crypto ETF, crypto-assets should obtain a high level of institutional support, a mature spot market, a regulated futures market, reputable and experienced service providers and transparent pricing mechanisms,” the guidance reads.
For each crypto ETF product application, licensed exchanges have to assess whether the issuer is able to fulfill its obligations in relation to the product, including providing safe and secure custody as well as obtaining relevant licenses.
In a response to public consultation, the ASIC also said that it doesn’t require domestic crypto custody for entities issuing crypto ETFs, noting that such restrictions would unfairly limit competition.
“While we acknowledge concerns raised by respondents about overseas-based custody of crypto assets such as the potential for difficulties in recovering assets across jurisdictions, we consider it would be inappropriate to mandate a domestic custodian requirement,” the document reads.
The news comes shortly after Australian hedge fund manager Cosmos Asset Management debuted its crypto mining-linked ETF on Chi-X Australia on Thursday. The Cosmos Global Digital Miners Access ETF began trading under the ticker DIGA and tracks several firms like Riot Blockchain, Marathon Digital, Hive Blockchain Technologies, Hut 8 Mining and others.
Australian ETF provider BetaShares is also preparing to launch a crypto ETF linked to industry companies like Coinbase and MicroStrategy. The crypto ETF will reportedly start trading on the Australian Securities Exchange under the ticker CRYP next week.
Crypto Founders Top Young Australian Rich List
Seven of Australia’s 87 richest entrepreneurs aged 40 and under are crypto founders, according to the Australian Financial Review.
The Australian Financial Review (AFR) has compiled a list containing 87 of Australia’s richest entrepreneurs aged 40 and under, each of whom boasts a net worth greater than 36 million Australian dollars ($26.9 million).
The list is topped by Melanie Perkins and Cliff Obrecht, the co-founder and the chief operating officer of popular graphic design software providers Canva. The married couple has an estimated net worth of 16.5 billion AUD ($12.3 billion) between them.
Seven crypto luminaires have debuted on the AFR’s “Young Rich” list of 2021, including the minds behind some of the leading protocols in the decentralized finance (DeFi) and nonfungible token sectors.
Kain Warwick, founder of derivatives trading protocol Synthetix, is ranked as the most affluent crypto figure in Australia, coming in at seventh overall with an estimated net worth of 879 million AUD ($657 million).
Warwick founded Synthetix in 2017, with the protocol consisting of an Ethereum-based decentralized synthetic asset issuance protocol that offers exposure to a wide range of markets, such as crypto, stocks and commodities via synthetic assets.
Synthetix ranks as the 22nd-largest DeFi protocol with a total value locked (TVL) of $2.2 billion, while its native SNX token is the 85th-largest crypto asset with a capitalization of $1.9 billion at the time of writing.
Synthetix has raised a total of 46.1 million AUD ($34.46 million) over six funding rounds. The rounds included participation from Paradigm, Coinbase Ventures and IOSG Ventures, according to Crunchbase.
Illuvium And The Warwick Brothers
Kain Warwick is not the only member of the family on the list, with three of his brothers in Aaron, Grant and Keiran also making the list this year.
The three brothers co-founded the upcoming play-to-earn crypto game Illuvium in 2020. Keiran leads the pack with a net worth of 463 million AUD ($346 million) to rank 22nd, while Aaron is close behind in 26th with 425 million AUD, and Grant comes in at 34th with 196 million AUD.
Despite the Illuvium game currently still being in development, the ILV token has shot up the market capitalization rankings this year amid meteoric price growth to currently sit at 145th with a capitalization of $721 million.
To date, Illuvium has raised $5 million from a funding round that included participation from Framework Ventures and IOSG Ventures.
Sustainable Bitcoin Miners
Brothers Daniel and William Roberts also made the list, with the duo ranking in at 19th with a combined 484 million AUD. The duo founded a sustainable energy-focused Bitcoin (BTC) mining firm dubbed Iris Energy earlier this year. Cointelegraph reported in July the firm was looking to raise $200 million in preparation to go public on the Nasdaq stock exchange.
Last week, the firm filed for an initial public offering with the United States Securities and Exchange Commission to raise up to $100 million. The firm intends to list its shares under the REN ticker later this year.
Sergienko’s Rise To Fame
Finally, Sydney-based Sergei Sergienko ranked 60th with a net worth of 97 million AUD ($72.5 million) in part due to his work with Chronobank, a blockchain-based firm he founded in 2016 that streamlines recruiting processes and enables workers to get paid in crypto assets.
“The company empowers HR and recruitment professionals with blockchain technology, as well as enabling global freelancers to secure the best jobs and make sure they are paid quickly and fairly,” Chronobank’s website reads.
Aussie Crypto Companies Keen To Embrace Regulations, Says Senator
Australian Senator Andrew Bragg says local crypto founders are keen to embrace regulation in a bid to propel the digital asset sector into the mainstream.
Australian Senator for New South Wales Andrew Bragg has asserted that robust regulations would “bring credibility and validity” to the country’s emerging digital asset sector.
Speaking to local publication Finder on Tuesday, the chairperson of the Senate Committee on Australia as a Technology and Financial Centre, commented that the country’s crypto sector has shown a willingness to embrace greater regulatory oversight in a bid to attain mainstream legitimacy.
“To my surprise, I’ve never seen an industry so keen for regulation,” said Senator Bragg.
“Almost everyone I’ve spoken to in this industry understood that regulation would bring credibility and validity to this sector.”
Bragg added that he expects new regulations overseeing the crypto industry will be introduced in Australia within the coming 12 months.
Bragg’s comments come after his senate committee published its “Crypto Report” last month.
The report made 12 recommendations intended to tackle key issues pertinent to the cryptocurrency sector, including a tax discount for crypto miners using renewable energy, new licenses for crypto exchanges, an overhaul of capital gains tax in decentralized finance, and new laws to govern decentralized autonomous organizations.
The document also acknowledged that the current lack of legislative clarity regarding digital assets “is creating uncertainty for project developers, businesses, investors and consumers.”
According to Bragg, the recommendations will enable Australia to compete with leading jurisdictions for the blockchain and crypto industries, including Singapore, the United States and the United Kingdom.
Surveys show that around 25% of Australians either currently or have previously held cryptocurrencies, making Australia one of the biggest adopters of cryptocurrencies on a per-capita basis.
The Australian Taxation Office estimates there are over 600,000 taxpayers who have invested in digital assets in recent years.
Swyftx, a Brisbane-based cryptocurrency broker with over 100 staff employed in Australia, called for the government to facilitate the growing demand for access to the digital asset industry.
“Bringing digital assets inside a tailored and sensible regulatory perimeter is a far better solution than forcing consumers to operate outside of it with unregulated, foreign providers,” Swyftx told the committee.
Blockchain Australia also commented on the need for Australia to enact appropriate regulatory reform in order to keep pace with other jurisdictions, the report stated.
“Australia is lagging behind international jurisdictions in the development of a fit-for-purpose crypto-asset framework,” the industry association commented
Commonwealth Bank To Enable Crypto Trading For 6.5M Aussies, ‘Other Banks Will Follow’
The CBA stated that it will support 10 crypto assets in its banking app, including Bitcoin, Ether, Bitcoin Cash and Litecoin.
The Commonwealth Bank of Australia (CBA) is set to launch crypto trading services for the 6.5 million users of its CommBank app.
The CBA will become the first bank in Australia to support crypto, and Blockchain Australia said it is “inevitable” that the other “big four” banks, including National Australia Bank (NAB), Australia and New Zealand Banking Group (ANZ) and Westpac, will soon follow suit.
According to a Wednesday announcement, the CBA has partnered with the Gemini crypto exchange and blockchain analysis firm Chainalysis to launch its crypto services. The bank will launch a pilot for a limited number of customers in the coming weeks before rolling out the full service in 2022.
Ten crypto assets will be supported in its banking app, with Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH) and Litecoin (LTC) named at this stage.
Steve Vallas, CEO of Blockchain Australia, told Cointelegraph that this move was “extraordinarily important,” as the big four banks in Australia “underpin our national and international reputation as a financial services destination.”
“The confidence that this provides local digital asset sector participants will be dwarfed by the impact that this signal sends around the world that Australia should be a destination for cryptocurrency and digital asset adoption.”
Vallas believes the rapid growth and adoption of crypto has “shifted the risk of maintaining a wait-and-see approach” in the view of the big banks to a risk of “inaction” and being left behind. Vallas believes it is only a matter of time before the other major Australian banks launch their own crypto services.
“It is inevitable that the other banks will follow suit. Clarity in the local regulatory landscape is emerging with issues such as licensing being tackled head-on by industry and by governments. That impediments to action and participation are being removed,” he said.
Caroline Bowler, CEO of local crypto exchange BTC Markets, echoed similar sentiments to Vallas, noting that “with regulation, in the offing and the largest bank in the country allowing it, the floodgates are now open for more appetite from traditional finance.”
“CBA’s move is exciting and inevitable. It’s yet another ‘red-letter day’ for crypto, and it is as though Australia has suddenly put the lead foot down. We have been touted as playing catch up all this while, but now we’re moving into a leadership position globally with our largest bank.”
Dave Abner, global head of business development at Gemini, said that his firm was “proud” to be working with CBA to launch world-leading crypto services.
“The exponential growth of digital assets internationally, coupled with Gemini’s institutional-grade security and proactive regulatory approach, positions this partnership to set a new standard for banks and financial platforms in Australia and across the globe,” he said.
Not everyone was pleased with CBA’s partnership, however, with Adrian Przelozny, CEO of Australian crypto exchange Independent Reserve, expressing his dismay over the bank partnering with an overseas firm.
“It’s disappointing that CBA went with an overseas player and didn’t engage with local players at all. We will be reaching out to the other Australian banks now,” Przelozny said.
Cointelegraph reported on Oct. 15 that Allan Flynn, a Canberra-based Bitcoin (BTC) trader, settled his first complaint at the ACT Civil and Administrative Tribunal against ANZ for de-banking him in 2018 and 2019 due to his occupation as a Digital Currency Exchange.
While ANZ denied any liability, the bank offered him a chance to reapply for a bank account, suggesting that the bank is more open to crypto than it was two to three years ago. Flynn also has a similar case against Westpac that’s ongoing.
Commenting on Wednesday’s news, Flynn told Cointelegraph that the crypto landscape in Australia is rapidly changing:
“There are a lot of things suddenly happening in the Australian Bitcoin space; you have the Senate inquiry, ANZ’s acknowledgment of a legit human rights question to be answered in my complaint, AUSTRAC’s extraordinary statement on de-banking last Friday, and now CBA’s digital currency plans being unveiled.”
“I’m just here arguing my lawful human rights and hoping it makes a difference,” he added.
The RBA’s Defeat Down Under Should Worry Central Bankers
A sudden surge in Australian government bond yields should have other monetary authorities watching their backs.
The bond market has just notched a win in its tussle with the central bank of the land Down Under. As inflationary expectations intensify globally, that could be a preview of things to come for many other central banks world-wide.
The Reserve Bank of Australia said Tuesday that it has scrapped its “yield curve control” policy, which aimed to peg 2024 government bond yields at 0.1%. The policy was introduced last March at the height of the initial spread of Covid-19 internationally and has been tweaked a few times since.
Tuesday’s announcement, however, was different: more of a concession to reality than anything else. The central bank had already effectively abandoned the policy by not stepping in as the market ran amok over the past few weeks.
Yields on two-year Australian government debt rose to 0.78% last Friday from 0.1% at the beginning of October. The surge picked up steam last week after inflation numbers came in higher than expected.
The RBA’s governor said Tuesday that the central bank faced a difficult choice between doing nothing or stepping in to defend a yield target that was losing credibility.
Ironically, the RBA’s inaction was the main reason the target had lost that credibility. The RBA’s board might have made the same decision at Tuesday’s monetary-policy meeting anyway, since last Wednesday’s annual trimmed core inflation reading of 2.1% edged back into the RBA’s targeted range of 2%-3% for the first time in years.
But having already quietly capitulated to the market move, the bank would likely have been in for an even costlier battle with speculators if it had tried to reconstitute the target ex post facto—especially if future inflation readings kept coming in above expectations.
The episode is a warning for other central banks, which could soon be facing a multitude of similar challenges from the market if inflation keeps surprising on the upside. Short-term bond yields have risen globally, though not as dramatically as in Australia. Two-year bond yields in the U.S. are around 25 basis points higher than two months earlier, for example.
The latest economic figures do point to higher inflation in many places. The difficulty for the central bankers, of course, is to judge whether such inflation is transitory—due to temporary supply-chain issues, for example—or more structural.
Central banks may eventually agree that inflationary pressure is real enough to warrant rate increases, but the last thing they want is to be seen as capitulating to market pressure rather than relying on their own judgment.
More real-time tests of their nerve seem very likely soon.
‘Too Risky’: $2.4 Trillion Pension Sector Remains Wary of Crypto
Cryptocurrencies are getting a cool reception in Australia’s A$3.3 trillion ($2.4 trillion) pension fund industry, underlining the challenge digital assets face to win significant investment from retirement savings.
Long-term funds have to watch how the crypto sector develops, but extreme price swings make virtual currencies “too risky to be considered for institutional portfolios,” Ross Barry, who oversees A$27 billion as chief investment officer of superannuation fund Spirit Super, said in an interview.
“It’s still volatile and there are still significant governance risks around things like even down to how do you have custody,” Barry said. “I don’t think it’s fit for purpose for superannuation funds.”
Some pension funds globally have committed relatively small amounts to the nascent asset class, for instance in the U.S., but such public announcements are relatively few and far between.
Crypto supporters argue it’s a matter of time, pointing to diversification benefits and surveys such as one from Fidelity Investments Inc. suggesting most institutions are interested and plan crypto allocations by 2026.
Crypto volatility has been in full display this month. Bitcoin surged to a record of almost $69,000 on Nov. 10, boosted by optimism around the launch of the first Bitcoin-linked exchange-traded fund in the U.S. It has since tumbled back to about $58,000.
Crypto-stocks linked ETFs have been rolled out in Australia in recent weeks. Providers including VanEck Associates Corp. and BetaShares Holdings Pty are looking at launching ETFs providing exposure to spot Bitcoin and Ether prices as local regulations evolve.
For pension and other funds, investing in tokens via regulated ETFs can fit into a “multi-asset portfolio with a lot more transparency,” Alistair Mills, director of institutional business and capital markets at BetaShares, said in an interview.
It remains to be seen how much of a difference such products would make. In self-managed pension funds — where there’s arguably a higher likelihood of investment in crypto — just A$212 million is invested in digital assets from a pool of A$822 billion, according to Australian Taxation Office data.
Barry at Spirit Super is continuing to research virtual currencies, especially central bank digital currencies, which could lead to a crypto shakeout and bring legitimacy to the private tokens that survive.
“It would be remiss of us not to keep a weather eye on the potential for cryptocurrency to become a more relevant part of the global currency system,” Barry said. “We’ve just taken the view that it’s just still too untested.”
Australia Set To Report First Budget Surplus In 15 Years
* Aims To Keep Fiscal, Monetary Policy Aligned Against Inflation
* Government Likely To Face Tax Reform Call As Costs Ahead Swell
Australia is headed for its first budget surplus since 2008 as windfall tax revenue from a fully employed economy and elevated commodity export prices combine to swell the government’s coffers.
Treasurer Jim Chalmers will forecast a surplus of around A$4 billion ($2.7 billion) in the 12 months through June 2023 when he hands down the budget at 7:30 pm local time Tuesday at Parliament House in Canberra. The document will also show smaller deficits over future years than previously anticipated.
“Our responsible economic management is all about spending restraint, substantial savings redirected to other priorities, and modest but meaningful tax changes,” Chalmers said in a statement Monday. “We are putting the budget on a much more sustainable footing.”
The center-left Labor government is resisting the temptation to spend the windfall revenue and is instead trying to keep fiscal and monetary policy aligned to rein in inflation.
Chalmers is betting that prudence now will pay off in two years’ time when he hopes to face an election with prices contained and borrowing costs falling.
As a result, spending measures will be limited and focused on low-income earners and disadvantaged groups hardest hit by rising prices and higher rates.
What Bloomberg Economics Says…
“Surging revenues are likely to drive a temporary surplus in 2022-23, before the budget heads into deficit in future years. Conservative commodity price assumptions are likely to remain in place, driving much of the fiscal deterioration over the forward estimates period.”
— James McIntyre, Economist
The centerpiece of the budget is A$14.6 billion worth of measures over four years that include relief from high energy costs for households and small business. The budget will also extend support payments for single parents until children are 14-years old, from age 8 at present.
The centerpiece of the budget is A$14.6 billion worth of measures over four years that include relief from high energy costs for households and small business. The budget will also extend support payments for single parents until children are 14-years old, from age 8 at present.
The Australian newspaper reported that the budget will include an increase in the JobSeeker payment for unemployed people, which has fallen behind cost of living increases.
Among revenue measures that will be set out in the fiscal report is a revamping of the Petroleum Resources Rent Tax that’s estimated to raise A$2.4 billion through 2027 by capping generous deductions for the gas industry.
Many observers say the government is going to need to delve deeper into tax reform in order to deal with longer-term budget pressures.
For now, Australia is leaning on potential benefits from a post-pandemic reopening by China, its biggest trading partner, and the warming of ties between Canberra and Beijing. Prospects of a record-high migration is also seen to fuel domestic demand.
Economists surveyed ahead of the budget predict a deficit of 0.8% of gross domestic product in the 12 months through June 2024, with the shortfall widening to 1.5% of GDP the year after that.
“New expenditure near-term will be modest, and some of it may also be temporary, consistent with the treasurer’s message to be fiscally responsible at this stage of the economic and monetary policy cycle,” said said Su-Lin Ong, chief economist and head of fixed-income strategy at Royal Bank of Canada.
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