Australia could unlock A$24 billion ($17 billion) a year from developments in tokenized markets and digital assets, but only if lawmakers push for regulation, according to a new report from a local fintech research group.
The Digital Finance Cooperative Research Center (DFCRC) said in a report titled “Unlocking Australia’s $24 billion digital finance opportunity” released on Monday that regulatory uncertainty, coordination challenges and limited ways to develop pilot projects are the biggest constraints facing the industry.
One way to address the gaps would be to create a sandbox to test new technology, such as tokenized financial market use cases, DFCRC said. It is said that this will lead to continuous collaboration between regulators and industry participants and improve the licensing framework.
The research team also proposed that tokenized government bonds and central bank digital currency (CBDC) be sandboxed to support the development of tokenized markets, collateralized lending and related financial services.
The DFCRC report was jointly developed with the Australian Digital Economy Council and funded by the OKX cryptocurrency exchange.
Better markets, payments and assets are key
DFCRC estimates that additional business profits can be generated annually from markets with greater investor access, deeper liquidity and higher market participation.
At the same time, tokenized currencies such as stablecoins and CBDCs can streamline cross-border and domestic transactions and benefit by reducing reliance on correspondent banks that charge high fees.
According to the report, tokenization creates assets with greater transparency, usability, and flexibility, which can also increase their utility and make them directly usable “within automated trading, lending, and collateral management systems.”
“Nearly half of asset-based economic benefits will come from enabling collateral, repo and invoicing markets on tokenized rails, where smart contracts automate collateral, margin and settlement management,” the report said.
Without better regulation, $17 billion is off the table
Keith Cooper, CEO of crypto exchange OKX, said that without better regulation, the estimated economic benefits over the next few years would be much lower.
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On the current trajectory, and without major industry changes, the DFCRC estimates that Australia will generate only A$1 billion ($710 million) in economic benefits from crypto by 2030.
“Long-term economic benefits will only be realized through sound regulatory frameworks and an infrastructure built to institutional standards. This is how Australia builds confidence, attracts capital and secures its place in the next era of global finance,” Cooper added.
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