ANZ’s stablecoin used to buy tokenized carbon credits

A$DC

The latest A$DC transaction saw ANZ’s institutional partner Victor Smorgon use A$DC to purchase Australian Carbon Credit Units from blockchain-based carbon trading platform BetaCarbon.

ANZ’s stablecoin A$DC has been used to buy Australian tokenized carbon credits, marking another critical test of the asset’s use cases in the local economy.

In March, the “Big Four” bank became the first major Australian financial institution to mint its own stablecoin after overseeing a pilot transaction worth 30 million AUD ($20.76 million) between Victor Smorgon Group and digital asset manager Zerocap.

ANZ’s stablecoin is fully collateralized by Australian dollars (AUD) held in the bank's managed reserved account. So far, A$DC transactions have primarily been conducted over the Ethereum blockchain.

According to a June 27 report from the Australian Financial Review (AFR), the latest transaction saw its long-time institutional partner Victor Smorgon use A$DC to purchase Australian Carbon Credit Units (ACCUs).

The carbon credits were tokenized and provided by BetaCarbon, a blockchain-based carbon trading platform that issues digital security assets dubbed “BCAUs,” which represent one kilogram of carbon offsets per credit.

The transaction also saw participation from Zerocap again, who provided market-making services and liquidity by exchanging the A$DC sent from Victor Smorgon into USD Coin (USDC) so that BetaCarbon could accept the deal. The value of the transaction has not been specified, however.

In terms of the bank’s outlook on the crypto/blockchain sector, ANZ’s banking services portfolio lead Nigel Dobson told the AFR that the firm is looking at blockchain tech as a means of “pursuing the transition of financial market infrastructure” and is not necessarily interested in speculative crypto assets themselves.

“We see this is evolving from being internet-protocol based to one of ‘tokenized’ protocols. We think the underlying infrastructure – efficient, secure, public blockchains – will facilitate transactions, both ones we understand today and new ones that will be more efficient.”

Dobson echoed similar sentiments at the Chainalysis Links event in Sydney on June 21, noting that ANZ promptly “banned the word crypto immediately in all of our internal communications and narrative” when it started exploring blockchain tech a few years ago.

He went on to add that the bank has explored multiple use cases for blockchain tech, such as supply chain tracking and providing on-ramps via stablecoins for institutions to invest in digital assets. However, Dobson suggested that tokenized carbon credits were a key area that the bank has been gearing up for:

"Another area where we have a strong position in terms of sustainability is where we feel the tokenization of carbon credits and marketplaces driven by tokenized assets and tokenized value exchange will be really efficient."

At the start of this month, ANZ ruled out offering any crypto exposure to retail investors due to their lack of financial literacy.

Maile Carnegie, an executive for retail banking, noted at the Australian Financial Review Banking Summit that “the vast majority of them don’t understand really basic financial well-being concepts.”

A$DC rocks the Aussie dollar as ANZ bank mints first AUD stablecoin

A$DC

“Most of the industry utilizes non-bank and often unregulated USD stablecoins. Now with this Big 4 bank-issued AUD stablecoin, the use case is a lot more compelling,” said ZeroCap CEO Ryan McCall.

Big 4 bank ANZ has become the first Australian bank to mint an Australia dollar (AUD) pegged stablecoin named “A$DC.”

But rival bank NAB also has its own stablecoin project which is expected to launch by the end of the year.

ANZ is working with local regulators such as AUSTRAC and APRA to get the project signed off in a compliant manner, and has already run a test transaction on the Ethereum blockchain with its institutional partner Victor Smorgon Group, the family office tied to the billionaire Smorgon family.

According to a March 24 report from the Australian Financial Review (AFR), the stablecoin will initially be rolled out for institutional clients seeking a cost-effective on-ramp for crypto investments, however it is likely to be opened up to the retail trading market in the near future as well.

The pilot transaction saw Victor Smorgon send $22 million (A$30 million) worth of A$DC to Zerocap, an Australian digital asset fund manager that has partnered with ANZ to provide key infrastructure and advisory services.

Fireblocks, a global digital asset custodian, provided the infrastructure, while OpenZepplin audited the smart contracts. Chainalysis has signed on to assist with compliance and regulatory obligations.

Speaking with Cointelegraph, Zerocap CEO Ryan McCall emphasized that the ANZ’s move is not only a “huge step” in crypto going mainstream for Australia, but also globally, as it provides a legitimate example of a stablecoin being backed by a fully regulated, compliant and traditional financial institution:

“Until A$DC we’ve not had a bank-backed Aussie dollar stablecoin, and most of the industry utilizes non-bank and often unregulated USD stablecoins. Now with this Big 4 bank-issued AUD stablecoin, the use case is a lot more compelling.”

In relation to the A$DC pilot test, McCall noted the ANZ’s institutional division “were enthusiastic and fully committed to this project, the ecosystem generally, and delivering an end-to-end solution and service.” He declined to speculate on what could come next from the major bank.

While the transaction was conducted on Ethereum, he said ANZ will likely take its time to weigh up its options, with the distributed ledger technology (DLT) based Hedera also being looked at.

“The transition to ETH2 and beyond will be important. It's not a sure thing for Ethereum though as Hedera and others are in the mix here, including from an ANZ perspective,” he said.

McCall said it was “inevitable” the Big 4 banks will look to become major direct on-ramps/off-ramps to crypto in the near future.

Nigel Dobson, ANZ’s banking services portfolio lead, said that a digital Aussie dollar provided by a bank will accelerate the local digital asset economy.

“Our customers want to buy digital assets and seeing a digital Australian dollar minted by a large ADI [authorized deposit-taking institution] like ANZ will make them confident they can transact with us, and use the coin domestically. This means they don’t have to flip in and out of US dollar coins, taking exchange risk in an elongated process.”

ANZ is not the only local bank working towards launching a stablecoin of late, after NAB executive of innovation and partnerships Howard Silby emphasized during the Australian Blockchain Week event that “banks are starting to have a mainstream blockchain moment.”

Silby stated that NAB is working on a stablecoin to settle transactions on its distributed ledger technology (DLT) based- carbon credit platform “Carbonplace,” which is slated to launch at the tail of 2022.

“The stablecoin component to make sure that both parts of the transaction can all be on-chain is super important and that's another exciting development working on at the moment,” he said, adding that:

“We've done trades, but we've had to settle partly in fiat. So the big breakthrough will be later this year when we have a stablecoin and we can actually do the whole thing on-chain.”

ANZ stablecoin