Using ANZ’s Australian dollar stablecoin, settlement was possible “on chain”. That is, the payment and transfer of the BCAUs took place on Ethereum, without having to send them to an existing payment network such as Visa or the New Payment Platform (NPP), a process that adds complexity, slows settlement times and creates counterparty risk. .
Zerocap, a digital asset manager and custodian, acted as the market maker in this latest deal, creating liquidity for the A$DC for the first time. Because BetaCarbon accepted a US dollar stablecoin USDC for its BCAUs and not A$DC, Zerocap created a market between the A$DC and USDC, allowing Victor Smorgon to buy BCAUs in the Australian dollar-denominated stablecoin.
With many speculative investors in crypto markets suffering from falling prices as global interest rates rise, Nigel Dobson, ANZ’s lead bank, said the bank’s focus in the space is on creating digital representations of financial market assets rather than speculative coins. .
“ANZ is committed to transitioning the financial market infrastructure,” he said. “We see that this is evolving from an internet protocol to one of ‘tokenized’ protocols. We think the underlying infrastructure – efficient, secure, public blockchains – will facilitate transactions, both those we understand today and new ones that will be more efficient.”
Last week, the Bank for International Settlements, which represents central banks, said public blockchains had many risks. But Mr. Dobson said that ethereum was attractive because it had created de facto standards.
He compared ethereum’s ERC20 “smart contract” standard to SWIFT, a messaging system used by global banks, and said banks developing on ethereum would be able to switch to alternative blockchains such as Polygon, Hydra or Solana as they got bigger. “Standards are absolutely fundamental to interoperability, and they will soon enable organizations to transfer assets from expensive and arguably unsustainable blockchains to blockchains with lower costs, faster throughput and sustainability credentials,” said Mr. Dobson.
Under the terms of the deal, ANZ provided Victor Smorgon and Zerocap with redemption rights for A$DC so that the tokens could be returned in Australian dollar cash. A$DC is fully backed by the Australian dollar and is redeemable against the amount held in an ANZ managed reserve account.
The Council of Financial Supervisors said last week: stablecoin regulation was a key topic at its latest quarterly meeting and will be part of a “stored value facilities” (SVF) regime being instituted by the Australian Prudential Regulation Authority.
Mr. Dobson says this is the right framework, as the A$DC can be considered a “tokenized deposit”. It does not have a mounting mechanism like the algorithmic stablecoin TerraUSD which failed spectacularly in May; there is no risk of A$DC going off hook.
Mr Dobson said the way of thinking about the product is like another form of money: instead of issuing a payment card that can be used to move deposits between parties, ANZ had issued a digital token representing the funds who had it in custody for moves on blockchain technology. “We’re just changing the form factor of the stored value instrument,” he said.
Zerocap CEO Ryan McCall said the current crypto market volatility would lead more institutional investors to study tokenization of real-world assets to improve liquidity and transparency, rather than consider chasing speculative gains.
“Market conditions give companies the opportunity to look inward and focus on innovation,” he said. “We think most of the growth in digital assets will come from tokenization.”
BetaCarbon CEO Guy Dickinson said his company wanted to “accelerate the race to net-zero and revolutionize the way we all interact with carbon markets for investors, businesses and consumers”.
This month, Minister of Climate Change Chris Bowen said he would continue with a review of Australia’s carbon credit system. while the government wanted to encourage the private sector to build secondary markets for trading carbon units.
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