Australia Emerges as International Leader in DeFi & Tokenization

DeFi, or decentralized finance, is currently exploding across international financial markets, promising to disrupt and potentially replace traditional centralized banking services with decentralized, peer-to-peer alternatives — and Australian startups are leading the charge.

The nascent DeFi revolution is the product of synergy between the blockchain-driven tokenization and new regulatory frameworks that have adapted to the international cryptocurrency market. 

Legislative action aimed at providing cryptocurrency and blockchain enterprises with the ability to operate within the boundaries of financial law has legitimized the use of distributed ledger technology in finance applications, opening the door to a new generation of fintech and defi enterprises.

Australian Shifts Towards DeFi-Friendly Regulatory Position

Suggestions made to the Senate Select Committee on Financial Technology and Regulatory Technology in January 2020 saw the Australian Prudential Regulation Authority (APRA) suggest relaxed accommodations for digital wallets and payment services.

Proposed APRA solutions defined earlier suggestions brought forward by the Council of Financial Regulators (CFR) — a coordinating body of Australian regulatory bodies that includes APRA, ASIC, the Reserve bank of Australia, and the Treasury.

The fundamental goal of APRA and CFR discussions on DeFi and fintech regulation is clearly-clarified responsibilities and an update of the regulatory frameworks that govern stored-value facilities in order to better support Australian digital currency wallets and services, stablecoin ecosystems, and other DeFi applications.

Aussie DeFi Platforms Ahead of the Curve

APRA is expected to present a final report on the regulatory changes that will affect the developing Australian DeFi industry by October 2020 — but that hasn’t stopped enterprising Australian decentralized finance from launching highly successful platforms in the interim. 

Sydney-based Synthetix.io is a major success in the DeFi ecosystem, operating a decentralized synthetic asset platform that provides on-chain exposure to real-world stocks, commodities, currencies, and indices. More recently, the Sydney startup has unveiled a 2020 roadmap that will see the platform scale up to a decentralized Ethereum-based decentralized exchange to directly compete with BitMEX.

ThorChain, another successful Australian DeFi startup, aims to create a decentralized liquidity network that allows anybody to instantly swap any blockchain token, as well as facilitating decentralized lending and borrowing alongside stake assets in liquidity pools. 

Other Aussie DeFi projects such as Ren and mStable are rapidly establishing Australia as an international leader in the development and launch of decentralized finance. With friendly regulatory proposals in the works, Australia is positioned to become one of the most active contributors to the DeFi revolution.