National Australia Bank (NAB) recently announced the launch of its stablecoin, AUDN, which is backed by the Australian dollar. The move comes amid the exponential growth in digital payments, ownership, and trading in cryptocurrency, stablecoins, and other digital assets in Australia over the last few years.

In a recent conversation with Danny Armstrong, NAB’s Chief Innovation Officer, Howard Silby, highlighted the importance of stablecoins as essential building blocks for the new web3 economy and offering stable cash links to other blockchain applications. The Australian dollar-backed stablecoin is expected to avoid the fluctuations associated with cryptocurrencies and offer a more efficient means of payment than traditional methods.

In the interview, we explored topics such as the advantages of stablecoins, the risks associated with conducting transactions on the public blockchain, and NAB’s future plans. Minted in several currencies, Howard emphasised the potential to facilitate cross-border transactions and high-value use cases, such as the carbon market and repo transactions. He also discussed green deposits and sustainable finance, supply chain financing and trade settlements and much more.

We invite you to watch the full interview to learn more about NAB’s stablecoin and its potential benefits for various industries and use cases.

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On 18 October 2022, SW’s Danny Armstrong sat down with CEOs Ruslan Kogan, Founder and CEO Kogan.com (ASX:KGN), Guy Carvalho, Co-Founder & CEO IBoA a member of Novatti Group (ASX:NOV) and Kurt Hansen, CEO Tesserent (ASX:TNT) to explore what digital transformation has meant for their businesses.

It was a candid, informative and interesting conversation. We invite you to take a look.

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Increased usage has led to a raft of new products and platforms, prompting governments and regulatory bodies around the world to review the suitability of existing regulatory frameworks and engage with industry to ensure regulation and protections are suitable.

While there are currently three types of stablecoin, Novatti has launched its Australian stablecoin, AUDD. Backed by a fiat currency – the Australian dollar – it is less volatile than other cryptocurrencies and more efficient than traditional payments methods.

SW’s Danny Armstrong sat down with Peter Cook, the CEO of Novatti, for the first of our SW Financial Services interviews on the digital asset landscape.

Peter takes us through the different types of stablecoin, the AUDD point of difference, the Stellar platform, future plans and the trade and payment benefits for exporters, importers and domestic businesses.

Click below to watch the full interview and reach out to our Financial Services Digital Assets team for further assistance.

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This was a landmark transaction for the digital economy, as this is the first time an Australian bank has minted a digital asset linked to the value of the Australian dollar.

In this case, the ‘transaction’ was a proof of concept test case which involved ANZ minting a stablecoin, backed dollar for dollar by an AUD denominated deposit lodged with ANZ by its client, in a quarantined bank account. The stablecoin was then transferred to a digital currency exchange, and to a global digital asset custodian. A separate group provided anti-money laundering assurance for regulatory purposes and another group audited the capabilities of the coin and certified its existence on the blockchain and issuance to the highest security standards.

As this was a proof of concept, the client did not actually transact to purchase digital assets in this instance. The ‘transaction’ was unwound by reversing the process and ultimately ‘burning’ the stablecoin (i.e. removing it from the blockchain) and returning the customer’s fiat currency held in the quarantined ANZ bank account to them.

The next step to finalise prior to an actual transaction being facilitated is for the bank to arrange relevant licensing and ‘prove’ the process to exchange the AUD stablecoin for a USD denominated stablecoin to facilitate the purchase of digital assets by their client.

Potential for broader application

An interesting feature of ANZ’s stablecoin is that it is programmable for different use cases, such as execution and automation of different elements of smart contracts, making the scope for use in due course potentially limitless.

As an example, the bank is separately working on a use case that automates payment of excise duty to a digital wallet with the Australian Taxation Office when stock moves from a manufacturer to a wholesaler in a client’s supply chain.

A key element of the ANZ stablecoin is that it is issued by a regulated approved deposit-taking institution in Australia, which provides a layer of trust and gives clients confidence in the security standards surrounding issue and use of the coin. In the proof of concept transaction, the client’s fiat currency remained securely in the Australian banking system, while the stablecoin was utilised to move value through various elements of the transaction chain.

These types of transactions are only in the early stages of development in Australia, and accordingly are currently only potentially available to our largest institutional businesses. As the technology becomes more familiar over time, it is expected that they will become more mainstream and available to a wider range of users.

How can SW assist?

SW is working with a number of clients in the digital asset space in preparation for regulation of the sector in Australia following issue of the Bragg Report in October 2021  (Senate, 2021).

We anticipate that a licensing regime for the sector could be introduced as early as the end of 2022, and that it will include the establishment of capital adequacy requirements, auditing and responsible person tests, together with anti-money laundering and counter-terrorism financing regulation, in line with recommendations from the Report.

For advisory, tax or accounting assistance with your digital assets, reach out to your SW contact or the SW Digital Assets team to see how we can assist you.

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