July 2016

PROMOTING BLOCKCHAIN INNOVATION IN AUSTRALIA

In This Edition

- CEO's MESSAGE:
  A Three-Step Plan to Boost Australian Competitiveness using Blockchain

- New ADCCA Board

 

- ADCCA & CAANZ call for Global Accounting Standards for Crypto-Currencies


 

- The Not Very Exciting Story of the Bitcoin Halving


 

- Review of Australia's AML/CTF Laws Recommends Full Inclusion of Digital     

  Currencies


 

- Digital Commerce Headlines


 



Nick Giurietto


CEO's Message

A Three-Step Plan to Boost Australian Competitiveness using Blockchain

T he re-election of the Turnbull Government is likely to see a renewed focus on the "Innovation Agenda" to improve the competitiveness of the Australian economy and create the businesses and jobs of the future.

Blockchain technology has the potential to be THE major driver of micro-economic reform.  Core economic processes can be re-engineered to deliver greater efficiency and improved service and set free a wave of experimentation and innovation.

But this will require an active national strategy that brings together industry and government to create the economic systems of the 21st century.

ADCCA proposes a three-part plan to leverage the transformative impact of blockchain:


1.  CO-ORDINATED REGULATORY REVIEW

Many Australian regulatory agencies, perhaps led by ASIC and AUSTRAC, are responding commendably to the rise of blockchain technology. And the Government has flagged its intention to update GST laws and formally extend AML/CTF laws to the digital currency sector.

These are all important steps.  However, on their own, they are insufficient to truly encourage the flourishing of blockchain innovation.  Important questions such as the scope of the AFSL regime, the impact of Privacy laws or something as seemingly simple as a consistent definition of 'digital currency' across different Acts remain obstacles.

Removing one growth-constraining barrier alone does not allow an entrepreneur to expand their business.  It simply means they must turn their attention to the next barrier.

A co-ordinated national strategy to review key regulatory areas with a clear goal to achieve genuine technology neutrality within one year will provide the regulatory certainty essential for innovation.


2.  START MOVING GOVERNMENT REGISTRIES 'ON-CHAIN'

The myriad government-operated registries that are embedded with a modern economy have long been identified as prime candidates for renewal using blockchain technology.

In Australia, most of those registries work pretty well and the scourge of official corruption that is a major driver of reform overseas is thankfully rare. However, justified satisfaction can too easily become complacency.

Progressively identifying key government registries - in many cases operated by State governments - and redesigning them using blockchain offers several important benefits.

Firstly, it provides government service delivery bodies with the rare opportunity to improve both the efficiency AND quality of service.

Secondly, it creates an opportunity to learn and experiment so as to better understand where blockchain technology is most useful - and where it is not.  Starting with less important systems the knowledge and confidence gained can lead to bigger transformations.

Third, it will boost the growth of the blockchain application development community, attracting talent and investment to create much sought after hubs of innovation and entrepreneurship.

And, most profoundly, the movement of government registries on-chain will create new, 'tradable' electronic assets which will serve as the foundations of whole new business ideas that can hardly even be imagined today.


3.  BEGIN DESIGNING THE ECONOMIC ECO-SYSTEM OF TOMORROW

The most compelling feature of blockchain technology is the ability to link together multiple participants in a transaction or a system using shared and mutually trusted data.

Blockchain solutions can offer real benefits within a single business or government agency but it is the opportunity to redesign the systems that operate BETWEEN businesses and governments where the business case payoffs become really exciting.

This reality has been recognised by the various business consortia that are starting to emerge, such as R3.

But Government has a vital interest in how these new systems - impacting everything from payments to identity to medic al records to property title and transfer just to name a few - evolve. Not only is Government a major participant in those systems but it has the responsibility to ensure that they develop in ways that encourage competition, improve efficiency and enhance the lives of citizens.

Data61 has begun some important work to 'vision' how these new systems might work.  A boost to that effort that consciously includes industry and civil society stakeholders as collaborators will accelerate the evolution of new economic systems and ensure that work well for all.


Together these initiatives will give a kick-start to entrepreneurship and business innovation and create the foundation for a more competitive economy and more prosperous society.
 
Nicholas Giurietto
CEO and Managing Director
ADCCA

   


NEW ADCCA BOARD
New and continuing Board Members appointed for 2016-18.

F our new members along with two continuing members have been appointed to the Board of ADCCA to serve a two year term which commenced on 1 July 2016.

Existing Board members Ron Tucker from BitTrade Labs and Leigh Travers of Digital X were appointed for new two year terms.  Ron will continue as Chair of ADCCA and Leigh has been appointed Deputy Chair. ADCCA CEO, Nicholas Giurietto, has also been appointed to the Board in the role of Managing Director.

Retiring Board members were Alex Tian and Chris Guzowski.  ADCCA would like to thank them both for their efforts to help the Association grow and looks forward to their ongoing support.

The new members of the ADCCA Board are:


Rupert Hackett from Buy-a-Bitcoin.
Rupert is the general manager of Bitcoin.com.au and BuyaBitcoin.com.au.  Rupert specialises in the digital currency and digital payment space and holds the world's first Master's degree in digital currencies alongside an undergraduate degree in Psychology. He writes for multiple bitcoin and tech websites.




Adrian Przelozny from Independent Reserve.
Adrian's career spans more than 15 years in Information Technology and Services specialising in the design and development of critical business systems.  Prior to founding Independent Reserve, Adrian was the principal consultant at a Sydney-based IT consultancy he co-founded with Independent Reserve inaugural CEO, Adam Tepper. Through this challenging role, Adrian led the delivery of many enterprise solutions for financial institutions across Sydney.


David Temple from Coin Loft.
David has 15 years experience as a software engineer building mission critical mobile and payment solutions. David has been involved in the design and development of systems for a number of tier one telecommunications carriers in Australia and globally. After being introduced to bitcoin in 2013, David developed a keen interest in digital currencies and launched Coin Loft digital currency exchange in early 2014.







AUSTRALIA CALLS FOR GLOBAL ACCOUNTING STANDARDS FOR CRYPTO-CURRENCIES


ADCCA  has joined with Chartered Accountants Australia and New Zealand (CAANZ) to call for the development of global accounting standards for cryptocurrencies.

In a joint letter to the International Financial Reporting Standards Interpretations Committee, CEOs Lee White of CAANZ and Nicholas Giurietto of ADCCA noted that there is currently significant diversity in the accounting treatment applied to crypto-currencies and that the absence of clear accounting standards limits comparability of financial statements  for businesses in the crypto-currency sector.

Lee White of CAANZ stated "investment in the crypto-currency sector is growing rapidly and there is a need to have clear and consistent global accounting guidance for entities operating in this industry".

Nicholas Giurietto of ADCCA said "investors in and regulators of the crypto-currency industry need a common toolkit to fairly assess the valuation of different players in the sector".

The letter to the IFRS Investigations Committee was prepared by ADCCA's Accounting Standards Committee chaired by Taralyn Elliot of Deloitte who supported the first float of a digital currency business in Australia, Digital X. Taralyn noted that "accounting practices for cryptocurrencies currently include treatment as cash and cash equivalents, as a financial instrument, as a non-financial asset measured at the lower of cost and net realisable value, as an intangible asset measured at fair value and as inventory measured at the lower of cost and net realisable value or at fair value less costs to sell".

ADCCA and CAANZ have indicated that they would be happy to support both the IASB and IFRSIC in providing background on the cryptocurrency industry and research support to assist in the development of accounting standards for the sector.
   


THE NOT VERY EXCITING STORY OF THE
BITCOIN HALVING


T he much anticipated the reduction in the Bitcoin mining reward from 25 to 12.5 Bitcoins per block - the "Bitcoin Halving" - occurred on July 9th.

In the run up to the halving, opinions differed quite dramatically as to the likely effect on the price of Bitcoin, the mining effort as measured by the hash rate and the number of ongoing miners contributing to the stability of the network.

In the event, the halving was a not very exciting event.  There was no statistically relevant impact on the Bitcoin price or on the hash rate.  And, early indications certainly show no sign of the withdrawal of mining operators in response to the lower reward.

A more detailed summary of this not very exciting event can be found in this article by Aaron van Wirdum.
   

REVIEW OF AUSTRALIA'S ANTI-MONEY LAUNDERING AND COUNTER-TERRORISM FINANCING LAWS

Recommendation to fully include Digital Currencies
within AML/CTF Laws.


T he Attorney-General's Department recently released a comprehensive review of Australia's Anti-Money Laundering and Counter-Terrorism Financing laws.

The review covers the full scope of the AML/CTF laws and includes recommendations to extend the scope of AML/CTF obligations to new sectors such as real estate agents and accountants as well as promising a simplification of the rules to make compliance more straightforward.

Importantly for the digital currency sector, the review recommends fully including digital currencies within the scope of the AML/CTF regime.  This is an important and welcome step as it will remove the regulatory uncertainty that is currently a barrier to the operation of a digital currency business in Australia.

As expected, the core recommendations of the review regarding Digital Currencies are:
  • creating a new designated service to include digital currency exchange providers;
  • creating new designated services to include any business involved in the transfer of digital currencies;
  • broadening the e-currency definition to include Bitcoin and other digital currencies;
  • the creation of a new report type to capture all digital currency transactions irrespective of value; and,
  • requiring digital currency exchanges to be registered.
ADCCA has had preliminary discussions with the Attorney-General's Department and understands that there will be an industry consultation period to help refine these principles into updated legislation.

ADCCA looks forward to the opportunity to contribute to this important process along with other key stakeholders such as AUSTRAC and the banking sector.
DIGITAL CURRENCY HEADLINES

The Hard Fork: What's About to Happen to Ethereum and the DAO

CoinDesk, July 2016

Good summary of the compromise of the DAO code and the upcoming corrective actions.


 

Why Trade Finance is a Good Use-Case for Blockchain

Australian Financial Review, July 2016

Trade finance is shaping up as one of the most promising early use cases for blockchain technology. 
The arrival of blockchain is prompting banks to search for analogue processes across the global economy which could be digitised to reduce financing risk. As a cumbersome process using multiple paper-based contracts with settlement typically taking weeks, the $US4 trillion ($5.3 trillion) trade-financing industry is set to be revolutionised by distributed ledger technology in the coming years.

 
EY Report: Blockchain Technology to Reach Critical Mass in Next 3 to 5 Years

newsbtc, July 2016
 
Blockchain technology is going to reach critical mass soon, declares Ernst and Young. The leading global consulting firm has recently published a report outlining the significance of blockchain technology in various industry sectors.


 
Moodys' New Report Identifies 25 Top Blockchain Use Cases from a list of 120

Bravenewcoin, July 2016
 
Moody's Investors Service (MIS) recently released a detailed report that names 120 blockchain projects being explored by various companies. The bond credit rating business then offers 25 top use cases for blockchain technology.

The report, "Credit Strategy -- Blockchain Technology: Robust, Cost-effective Applications Key to Unlocking Blockchain's Potential Credit Benefits," explores how blockchain tech potentially can improve record-keeping and transactional efficiencies across many different processes and industries.


 
ADCCA Membership Inquiries

Please click on here to inquire about becoming a member of the ADCCA
 
Copyright © 2016 | 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 1200+ 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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PO Box 21122 World Square
Sydney NSW 2002
AUSTRALIA



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