Australia is warming up to the idea of regulating digital assets. Other countries that have already done so include the UAE, the European Union, and Switzerland. Bridging the gap between Australia and other countries is a core objective. At the same time, Australia is endeavoring to compensate for the time it has lost by promoting innovation through crypto and blockchain technology. The sphere ideally includes services ranging from cross-border payments to real-world asset tokenization.
On a broader level, it is estimated that DeFi will reach a valuation of approximately $601 billion by 2032. RWA Tokenization has an estimated growth of $16 trillion locked for 2030.
Regulating the crypto and blockchain space is crucial due to several innovative approaches that have come up and many more are slated to make their way to the markets. Lack of clarity on the way to adopt those changes could lead to uncertainty, hesitation in adoption, and slow progress. Plus, having regulations in place enables a region to unlock the true potential of blockchain.
Australia’s approach is to extend its existing Australian Financial Services License (AFSL) to digital asset service providers. It would bring them under the same framework that covers traditional financial services. However, it does highlight a limitation related to the differences between the two sides. Digital assets don’t necessarily include an intermediary, while traditional financial services do. Plus, there is a perspective of blockchain and decentralization to consider.
Nevertheless, Australia has committed to giving enough room to digital assets for their ever-evolving utilities and use cases. Its approach is based on five years of interaction with industry professionals. Policymakers are now responsible for engaging with them more frequently and establishing clear rules to be followed. It will be imperative to not only facilitate the growth of their ventures, but also to safeguard investors who are entering the crypto investment zone for the first time or are new to the world of blockchain.
The proposed framework in Australia is already setting an example for others to follow. Understandably, it takes inspiration from existing frameworks. The primary driving force behind the global growth of innovation is the flexibility that authorities have fostered. Developers and investors hold the belief that it would be a baby step.
Rahul Advani, the Director of Policy for APAC at Ripple, emphasized that regulatory clarity is important as several innovators are looking to build not just for a few months but for years to come in their lives. Rahul added in his statement that regulatory clarity provides a roadmap that enables everyone to understand what they can build and how.
Ripple, for one, is looking to boost cross-border payments via Ripple Payments. It would facilitate a convenient real-time settlement throughout the day and night at an affordable price. Moreover, it would reshape how money moves all over the world.