Australia's Crypto Innovation Falls Behind; Policymakers and Banks Urged to Step Up

Australian policymakers and traditional financial institutions need to enhance their approach to embrace the emerging wave of crypto unicorns. Despite the country's innovation in the crypto sector, Australia is lagging in both retail and institutional demand for digital currencies due to a lack of regulatory clarity. Coinbase APAC Managing Director, John O'Loghlen, emphasizes the need for Australia to level up its regulatory framework to attract and support the growth of crypto unicorns, highlighting the potential for billion-dollar valuations in the sector.

Australia's Crypto Innovation Lagging, Policymakers and TradFi Firms Urged to Embrace Advancements

Amidst the burgeoning global crypto sector, Australian policymakers and traditional finance (TradFi) institutions are facing increasing pressure to enhance their innovation and embrace the transformative potential of cryptocurrencies. According to John O'Loghlen, Managing Director of Coinbase APAC, Australia's current performance in the crypto space falls short of the innovation emanating from the sector and fails to meet the evolving demands of retail and institutional investors.

Policy Lag Impedes Crypto Unicorn Growth

O'Loghlen emphasized the urgent need for regulatory clarity around crypto assets, particularly for the imminent wave of "crypto unicorns" – startups with billion-dollar valuations. He highlighted the crucial role of a well-defined regulatory framework in facilitating appropriate funding and growth for these innovative companies, which have the potential to become the next Canva, Xero, or Atlassian.

"I don't think the penny's dropped in Canberra or on the high street in terms of just how much great human capital there is in Australia," O'Loghlen told Cointelegraph, lamenting the lack of recognition and support for the country's burgeoning crypto sector.

Despite some positive developments, such as the Treasury's October 2023 consultation paper and informal meetings with policymakers, Australia remains behind in terms of retail and institutional demand for cryptocurrencies. The government's proposed approach, which involves regulating crypto exchanges but not tokens, and requiring exchanges to obtain a financial services license, has been met with mixed reactions.

Rising Demand for Crypto Products and Services

O'Loghlen highlighted the growing demand for various crypto products and services in Australia, including self-managed retirement funds, High Earners Not Rich Yet (HENRY), and stablecoins for digital remittances. He pointed to the increasing recognition of stablecoins' utility, particularly their ability to facilitate cross-border transactions with reduced volatility.

"Most of these companies would emerge as the next Canva, the next Xero, the next Atlassian, or the next Afterpay," O'Loghlen said, referring to several multibillion-dollar companies in Australia that have leveraged innovation and disruption to achieve success.

Coinbase's Expansion and Educational Initiatives

In a positive development, Coinbase plans to expand its presence in Australia later this year through a crypto campaign aimed at educating regulators, policymakers, and the public about the transformative power of cryptocurrencies. This campaign is expected to contribute to a deeper understanding of the sector and its potential benefits.

Australian Crypto Ownership and Awareness

According to the Independent Reserve Cryptocurrency Index (IRCI) 2024 survey, 95% of Australians are aware of at least one cryptocurrency, with 93% recognizing Bitcoin (BTC). However, awareness of other popular cryptocurrencies such as Ethereum (ETH) and Dogecoin (DOGE) remains relatively low, at 42% and 36%, respectively.

The survey also revealed that only 27.5% of respondents had owned or invested in any digital asset in the past 12 months, representing a slight decline of 1.9% compared to 2022. Age-wise, the majority of crypto investors or traders in Australia fall within the 25-34 age group, while only 6% of individuals above 65 own cryptocurrencies.

Interestingly, the survey found that personal recommendations from family and friends play a significant role in driving crypto investments, with 49% of respondents influenced by such advice. Media sources also exert a considerable influence, inspiring 43% of crypto investors.

Conclusion

As the global crypto ecosystem continues to evolve rapidly, Australia's policymakers and TradFi firms must seize the opportunity to enhance innovation, embrace regulatory clarity, and facilitate widespread adoption of cryptocurrencies. By embracing the transformative potential of blockchain technology and digital assets, Australia can foster the growth of a thriving crypto sector and position itself as a global hub for innovation.