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.

How can we discover what defi is good for?

Originally a post at Cryptoeconomics.

The blockchain world is currently obsessed with defi. In the past few months, billions in digital value have been staked, swapped and farmed in radical experiments using liquidity pools, automatic market makers and decentralised exchanges.

Defi is easily belittled as a collection of scam-riddled projects powered by magic internet money. Perhaps. But more optimistically defi is a spectacle of entrepreneurial discovery.

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What we think we know about defi

Originally a post at Cryptoeconomics with the RMIT Blockchain Innovation Hub team.

The financial sector exists solely to smooth economic activity and trade. It is the network of organisations, markets, rules, and services that move capital around the global economy so it can be deployed to the most profitable use.

It has evolved as modern capitalism has evolved, spreading with the development of property rights and open markets. It has grown as firms and trade networks became globalised, and supercharged as the global economy became digitised.

Decentralised finance (defi) is trying to do all that. But just since 2019, and entirely on the internet.

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