Opening Statement to Senate Select Committee into Fintech and Regtech

[This is the Hansard of the opening statement delivered on behalf of Dr Chris Berg, Dr Aaron Lane and myself to the Senate Select Committee into Fintech and Regtech]

Good morning. We welcome the opportunity to appear before this important committee today. I’m delivering this opening statement on behalf of my associates Dr Chris Berg, Dr Aaron Lane and myself. We appear here today in our personal capacity. We are a team of academic economists and lawyers affiliated with the RMIT Blockchain Innovation Hub in Melbourne. Chris is also a member of the steering committee of the Australian government National Blockchain Roadmap. Our research explores complex economic and public policy implications of frontier digital technology, including blockchain.

We have provided a written submission to the committee that outlines our research in this field. Our submission has two themes. The first theme is the potential of blockchain as new digital infrastructure. Applications of this technology represent a fundamental shift in the governance structure of the economy, with applications ranging from supply chains to decentralised finance, or DeFi. For Australia, blockchain represents a unique opportunity to transition our major sectors, such as trade and education, towards the digital economy.

The second theme of our research turns to the challenges that blockchain presents for regulation, or, more broadly, what governments do to foster blockchain innovation. Understanding the regulatory challenges of blockchains must recognise that blockchains are unique technologies of governance. They enable us to organise and to coordinate in new ways by facilitating trusted information and trade.

Ongoing regulatory possibilities of blockchain innovations are critical. While we do not cover specific regulatory issues in our submission, our interactions with industry partners suggest some current challenges, including [inaudible] taxation system, the potential treatment of blockchain and decentralised finance, products as managed investment schemes—some of these issues relating to ICOs [inaudible] issue. And finally whether blockchain base records will be accessible by Australian regulators—any specific regulation must be housed within a broader regulatory approach. Our standards should demonstrate to entrepreneurs that governments are adaptable and open to innovation and willing to reduce regulatory concerns. Our recommendation is that governments aid the transition to a digital economy by using and improving regulatory reform tools, such as sandboxes, to facilitate the process of regulatory evolution.

We thank you for the opportunity to appear before this committee and we welcome any questions that you have regarding our submission.

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