Digital assets have come of age in Australia

Australia is aiming to expand its presence and capabilities in digital assets by funding long-term research into asset tokenisation, central bank digital currency and regulatory technology. 

The federal government has provided $60 million to a new Digital Finance Co-operative Research Centre (DFCRC) to seed a commercially focused, decade-long research program examining the digitisation of real-world assets. 

The program has successfully secured an additional $121 million from industry partners including the RBA, NAB, Macquarie Bank, Origin Energy, the National Stock Exchange of Australia and Digital Asset, partly-owned by ASX. 

Soon, our real-world assets are going to be traded and exchanged digitally, directly and in real-time between any individual or organisation with a lower fee and less friction. 

‘Tokenisation’ means creating a digital representation of a physical asset, or existing asset class on distributed ledger technology such as blockchain. You can basically create digital coins, digital certificates or tokens directly representing  the ownership of real-world assets and then instantly buy or sell them. 

The government recognises this underlying distributed ledger technology will play a more prominent role in financial services, helping to improve access, security, transparency and the speed of current transactions. 

Blockchain and other technologies are set to become a fixture in financial markets, and may eventually lead to structural changes to market processes or even the market itself.

— Greg Medcraft, former ASIC chairman

The volume for “tokenised assets” is expected to grow from near zero today to $32 trillion by 2027. 

There are many potential use cases such as tokenising of real estate so big commercial buildings could be held by a wider range of investors, tokenising of commodities and precious metals. 

In the future, producers and manufacturers will digitise more of their assets through established stock exchanges, and automatically through any electronic distribution channel available to them. 

Researchers of the DFCRC would examine rules for real-time registers of ownership of digital assets, study blockchain technology, decentralised finance applications and rules and regulations to facilitate digital asset trading. 

Dr Andreas Furche, CEO designate of the DFCRC said the creation of digital assets “will have a profound impact on the rate of achievable economic growth and pave the way for new types of investable assets and whole new markets”.

The Minister for Industry, Science and Technology, Christian Porter, believes “the benefits could amount to billions of dollars in both efficiencies and new business opportunities each year.”

If done right, Australia can set itself up to be an att