Digital assets could add $40B a year to Aussie GDP: Tech Council report

November 30, 2022 Coin Telegraph

Digital assets could add B a year to Aussie GDP: Tech Council report

Chalmers

A clear principles-based regulatory approach to the digital assets sector could be a huge benefit to the Australian economy according to the report.

Up to $40 billion a year (AU$60 billion), could be added to Australia's national GDP with the right regulatory framework and could lead to enormous cost savings for consumers and businesses according to a new report.

The Nov. 29 Digital assets in Australia report was commissioned by the Tech Council of Australia (TCA), one of the country's technology industry advocacy groups, and written by technology consulting firm Accenture, which outlined a number of potential benefits the growth of the digital assets sector in Australia could deliver, stating:

“Digital assets (DA) have the potential to transform our lives offering significant time and cost savings to individuals and businesses”

The report estimates digital assets — such as cryptocurrencies, stablecoins, tokens, and Central Bank Digital Currencies (CBDCs) — could deliver an “80% reduction in retail payments costs by 2030,” save Australian businesses 200 million hours per year by automating tax compliance and administration, and a further 400,000 hours in preparing documents for business loans.

*Potential economic and social benefits of the digital assets sector in Australian dollars. Source: Digital assets in Australia 2022 report.*

It also points to potential savings for consumers of almost $2.7 billion per year (AU$4 billion), or $107 (AU$160) per person, if they use digital assets for international transactions while suggesting that an instant settlement of business transactions could be hugely beneficial for the 4,000 businesses that fail each year due to cash flow issues.

Decentralized Autonomous Organizations (DAOs) are referred to in the report as a way to build public trust by making decisions, transactions, and procedures “automated and transparent,” with all members of the organization granted equal rights through the issuance of utility tokens.

It also mentions that to fully unlock the potential of DAOs, the government needs to clarify the legal status of DAOs including the liability implications for its members after participants of the Ooki DAO were charged by American regulators.

The report estimates “up to 100% of payments” could be facilitated by digital assets if a retail CBDC is introduced, pointing to the rapid uptake of retail CBDCs in other countries such as the e-krona in Sweden.

On Sept. 26, the Reserve Bank of Australia (RBA) — Australia’s central bank — released a whitepaper detailing the minting and issuance of an Australian CBDC, called the eAUD, which would be issued as a liability to the RBA. The pilot project is set to commence in 2023.

The report aims to help the government regulate the sector in a way that enables innovation while protecting consumers, and follows a promise from a spokesperson of Australian Treasurer Jim Chalmers — prompted by the downfall of FTX — that regulations would be coming in 2023 which aim to protect investors while still promoting innovation.

According to a Nov. 14 report from the Australian Financial Review (AFR), 30,000 Australian investors and 132 companies have funds locked up with FTX.

CFTC commissioner compares crypto contagion risk to 2008 financial crisis

October 28, 2022 Coin Telegraph

Coin Telegraph

The commissioner warnes that vulnerabilities seen within the crypto markets are similar to those seen during the global financial crisis and calls for the agency to be given additional authority.

Commodity Futures Trading Commission’s (CFTC) Christy Goldsmith Romero has pointed to the collapse of the Terra ecosystem and its flow-on effects as an example of how contagion risks within crypto markets are similar to those experienced by the traditional financial (TradFi) system during the global financial crisis (GFC) of 2008.

Romero suggested in a speech given at the International Swaps and Derivatives Association’s (ISDA) Crypto Forum on Oct. 26 that increased links between crypto markets and TradFi increases the risk posed by crypto to overall financial stability, noting:

“The digital asset market remains relatively small and contained from the level of systemic risk that would come with greater scale or interconnections with the traditional financial system. But this may not be the case in the near future, particularly given growing interest by traditional finance.”

One area of TradFi the commissioner would prefer to remain distant from crypto is retirement and pension funds, an opinion which has likely been influenced by recent events in the U.K. where pension fund issues required intervention from the Bank of England.

I have significant concerns about the possibility of pensions and retirement funds investing in #Cryptocurency
— Commissioner Christy Goldsmith Romero (@CFTCcgr) October 27, 2022

While Romero cautions the U.S. not to rush regulations, she supports a “same risk, same regulatory outcome” approach as the level of risk posed by the crypto industry increases, suggesting:

“Similar to post-crisis reforms, Congress can address financial stability risks by providing additional authority to the CFTC.”

The GFC came about after banks began to lend recklessly to people without the means to fully pay back their mortgages. These ‘subprime’ mortgages were bundled together and sold as safe investment products before defaults started a ripple effect that spread across the world.

While the CFTC is often regarded as the more crypto-friendly regulator compared to the Securities and Exchange Commission (SEC), it appears to be attempting to change that image as part of its bid to gain more regulatory oversight after revealing it instigated 18 enforcement actions on the sector throughout the 2022 fiscal year.

One of the more recent CFTC actions was the fine levied at the Ooki DAO and its members, which was heavily criticized by a CFTC commissioner and members of the crypto community, who referred to it as “blatant regulation by enforcement.”

Before this action, decentralized autonomous organizations (DAOs) were regarded by many advocates as being “above the law”, and have resulted in the formation of legal entities within DAOs as a way to limit liability.

CTFC commissioner proposes office focused on retail crypto investors

September 29, 2022 Coin Telegraph

Coin Telegraph

The commissioner said the potential of blockchain and cryptocurrency to change existing markets necessitates a new retail investor protection office similar to that of the SEC.

Commodity Futures Trading Commissioner (CFTC) Caroline Pham has proposed the creation of an “Office of the Retail Advocate” aimed at expanding the CFTC's consumer protection mandate.

Pham referred to the office as a “voice for the people” in a speech given at an event hosted by blockchain project Corda on Sept. 27, suggesting recent events in crypto make retail protection a more pressing issue, noting:

“The crypto crash, risk management failures, and substantial retail losses, gives urgency to the need to balance innovation with retail protection and appropriate regulation.”

Pham has modeled the proposed office on the Security and Exchange Commission's (SEC's) Office of the Investor Advocate, stating it’s a “tried-and-true way” to advance customer protection.

The SEC's office has four core functions according to Pham, which are to provide investors a say in policymaking, assist retail investors resolve problems with the SEC or self-regulatory organizations, support advisory committees, along with studying investor behavior and conducting research and economic analysis.

Pham highlighted the potential of digital assets and blockchains to change existing markets outlining “ten fundamentals for responsible digital asset markets,” noting:

“It might still be early, but there are promising use cases if we can achieve blockchain stability and scalability across layer 1, 2, or whatever’s next.”

These fundamentals include initially determining whether something is a security, mitigating systemic risks such as the cascading liquidations due to the collapse of Terra, protection of customers and the retail public, ensuring transparency, and addressing conflicts of interest.

The proposal marks the latest effort in a broader push from the CFTC to increase its authority over crypto markets and follows calls from the community and United States lawmakers seeking clarity on the regulation of crypto.

The CFTC has been under fire recently following its “regulation by enforcement” over the Ooki DAO case, with the community comparing it to the regulation by enforcement tactics seen in the SEC's handling of the ongoing Ripple case.

Pham said these views are hers and are not necessarily shared by the CFTC or other commissioners.