June 2017

PROMOTING BLOCKCHAIN INNOVATION IN AUSTRALIA

In This Edition

- CEO's MESSAGE:
  Accelerated action needed to realise vision of a blockchain-enabled economy.

- Time to regulate token offerings?
 
- Global blockchain forum sets priorities for regulatory alignment
 


Nick Giurietto


CEO's Message

Accelerated action needed to realise vision of a blockchain-enabled economy.

"Australia now has a clear picture of how blockchain technology could transform our economy in the coming decades.  We now need to make a choice to accelerate our efforts or see other countries overtake us while we pay the price of moving too slowly."


June 6 saw the release of two key reports on blockchain technology by Data61, the ICT unit of the CSIRO.

The first report,  "Distributed Ledgers - Scenarios for the Australian economy over the coming decades" applies Data61's strategic foresight methodology to identify four possible scenarios for the impact of blockchain or distributed ledger technology in Australia by 2030.

In the most positive scenario, rapid technological innovation and user adoption is supported by a proactive regulatory response and blockchain technology has become integral to the way services are delivered by both governments and businesses. In this world, a secure, online digital identity is used on a daily basis to make almost every consumer transaction simpler and more efficient and inbuilt fraud and security protections reduce back office costs for businesses and governments alike while protecting consumer interests.
 
At the opposite extreme, rapid technological change occurs far ahead of the pace of regulatory action resulting in failed blockchain experiments that erode consumer trust and delay the uptake of blockchain solutions and leaving Australia behind other advanced economies.

The key differences between the positive scenarios and the less desirable outcomes is the pace of user adoption and the certainty of the regulatory framework.


Table 2, Distributed Ledgers - Scenarios for the Australian economy over the coming decades


Government policy choices can impact both these outcomes and create an environment where blockchain innovation flourishes.  Or not.

R
Regulatory Certainty
 
Business innovation requires regulatory certainty in order for investment decisions to proceed and Australian regulators have generally been quite responsive in working with businesses to test how blockchain-based innovations can go ahead.
 
The recent announcement of the removal of double-GST on digital currency transactions and good progress on an updated AML/CTF framework are examples of important steps forward.
 
The next step needed to accelerate adoption of blockchain technology is a co-ordinated effort across key regulators and industry to ensure the regulatory framework is conducive to the deployment of blockchain solutions while ensuring consumer interests are protected.
 
Accordingly, ADCCA urges the government to establish a digital economy taskforce comprising key regulators and industry representatives.  The goal should be to ensure that regulation is genuinely technology neutral and that any unintended regulatory barriers to adoption of blockchain technology are identified and eliminated.


Government Blockchain Innovation
 
The Data61 report also highlights opportunities for government service delivery to directly benefit from blockchain technology.  With ever greater demands on the government budget, opportunities to improve both the quality and efficiency of government service delivery should be exploited to the full.

The second report, "Risks and Opportunities for Systems using Blockchain and Smart Contracts", provides a strong guide to the technical issues that can and will need to be overcome to see widespread adoption of blockchain solutions.
 
Government use of blockchain technology will deliver direct benefits in government service delivery.  Importantly, it will also help create the critical mass that will see Australia continue to grow as a centre of excellence for blockchain innovation and help build consumer and citizen confidence in blockchain solutions.
 
Accordingly, ADCCA calls upon the Government to identify a series of pilot use cases where the strengths of blockchain technology can be tested in real world delivery of government services.  As understanding of and confidence in the technology grows, blockchain-based solutions for larger government services can be envisaged and developed.

The reports are available here.



Australia now has a clear picture of how blockchain technology could transform our economy in the coming decades.  We now need to make a choice to accelerate our efforts or see other countries overtake us while we pay the price of moving too slowly.

Nicholas Giurietto
CEO and Managing Director
ADCCA

   

Time to Regulate Token Offerings?

  
Almost every day sees fresh news of a wildly successful ICO (Initial Coin Offering) or token sale.

June 13th saw blockchain startup Bancor raise over $US150 million in just three hours as "investors" bought into their vision of a 'smart token' that creates fully liquid markets for other blockchain tokens.

But Bancor is far from alone in raising funds through the booming ICO mechanism.  Research by Coindesk shows that, even before Bancor, ICO's had raised more than $US327 million compared with $US295 million for traditional venture capital investments into blockchain startups.



Numbers like these vindicate the arguments of proponents of ICO's.  They represent a phenomenally efficient way for start ups to raise funds.  Equally important, they democratise access to venture capital investments.  For the first time, ordinary small time investors have an easy way to participate in these opportunities.

Yet that same ease of access and the lure of apparently enormous returns means that regulators must turn their attention to the ICO sector.  Caveat emptor is a fair principle for sophisticated investors with access to detailed information.  Is it the same standard that should apply for ordinary investors?

There are at least four key questions that regulators and policy makers should consider:

- exactly what 'rights' does participation in an ICO confer?  If ownership of a token does not     represent an equity stake in the business, just what is it?

- what is the appropriate level and form of disclosure to potential participants in an ICO?

- what is the right standard for governance of an ICO?

- what mechanisms exist to protect against market manipulation?


Principles of existing securities law have evolved over the last century to answer just these issues.  Understanding just how they should apply to the new ICO sector and regulating accordingly will allow this new, more efficient and more fair fundraising mechanism to continue to grow while providing appropriate protections for ordinary consumers and market participants


Global Blockchain Forum sets priorities for regulatory alignment

 

The member countries of the Global Blockchain Forum came together for their Second Annual General Meeting on May 25th in New York following the Consensus conference.

The GBF was created at the previous Consensus conference with four founder members:

- Australia
- Singapore
- UK
- USA

The second meeting saw an additional five countries participating:

- Canada
- India
- Japan
             - New Zealand
             - UAE

In each country a national blockchain business association has been created with the goal of encouraging regulators and policy makers to better understand the potential of blockchain technology and to create a regulatory environment that allows businesses to invest in blockchain solutions with confidence.

A key objective of all the participating associations is to encourage global alignment of regulatory frameworks.  Blockchain is perhaps the greatest force for globalisation operating in the world economy today.

The Global Blockchain Forum members resolved to pursue three priority areas:
 
- encouraging Central Banks to create mechanisms that provide recognition for and support interoperability of blockchain tokens;

- developing solutions for identity on and for the blockchain;

- building linkages between cyber-security policies and the potential for blockchain technology to be deployed to shrink cyber-attack risks perimeters.

Blockchain innovators across the world have a key interest in these issues and an aligned push by all national members of the GBF will support global activities.
Read more at https://www.gizmodo.com.au/2017/05/from-2017-bitcoin-and-other-digi
 
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Copyright © 2017 | ADCCA | All rights reserved.

Published by the Australian Digital Currency & Commerce Association 
Editor: Nicholas Giurietto
Publisher: Ronald M. Tucker


The ADCCA Industry Newsletter reaches a regular audience of over 1500+ Industry and Government Leaders, domestically and abroad. This reach includes regulators, parliamentarians, enterprise C-Level executives as well as cross-industry stakeholder participants both at the professional association and emerging FinTech business levels. To learn more about ADCCA or enquire as to Membership opportunities, please contact us via the below:

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