Unveiling a recent report, the U.S.-based Atlantic Council think tank revealed an ongoing exploration of central bank-issued digital currencies (CBDCs) across 130 countries, with over half of those in advanced development, pilot, or launch phases. Yet for Australia, the journey towards an Aussie digital currency (eAUD) seems more painstaking and multifaceted according to David Lavecky, Head of Blockchain firm Canvas.
Australian CBDC, as reaffirmed by the Reserve Bank of Australia (RBA) in August, still appears to be a few years away— posing challenges such as legal, regulatory, and operational. Canvas, chosen for a critical role in the Australian CBDC research and pilot over the past year, demonstrated foreign exchange transactions using CBDC via their Layer 2 ZK network— Canvas Connect. They conducted the first-ever foreign exchange transaction (eAUD to USDC) in Australia, promising to increase speed while reducing risks and costs compared to traditional foreign exchange trading and remittance networks.
Yet, challenges lay in the balance of privacy and confidentiality in CBDC transactions. Their technology, offering ‘regulated privacy’, affords confidentiality without compromising interoperability and efficiency. This feature of their systems was reportedly valued by the RBA and other stakeholders as zooming onto the privacy aspect appears pivotal for any large-scale financial transaction system.
But the path towards the launch of a CBDC isn’t one devoid of obstacles. The pressing concerns of surrounding legal and regulatory frameworks for CBDCs require immediate attention. While technology advancement smoothly sails through with rapid development and deployment, the legal landscape lags behind with a dire need for a robust operational framework that can seamlessly integrate with existing financial systems.
When considering the cautious approach adopted by the Reserve Bank of Australia on the issuance of an eAUD, underlying reasons seem to be the multifaceted legal implications, regulatory challenges, and the economic conditions unique to each nation that influence the speed of adoption.
The most recent status of an eAUD is merely exploratory, as indicated by the recent RBA pilot. As Canvas leaps ahead to global CBDC opportunities from this launch pad, Australia’s approach to CBDCs is expected to continually evolve informed by ongoing research, international developments, and the experiences of early adopters.
Reflecting the regulatory clarity over cryptocurrency in Australia at a time when several digital assets businesses aim to cement themselves in crypto-friendly regions, Australia has shown proactiveness in providing a regulatory framework for digital assets, including cryptocurrencies. These existing guidelines, unlike the uncertain environment in areas such as the United States, lend clarity for businesses operating in the digital asset space.
Despite the concrete steps Australia has taken towards a more defined regulatory landscape, the continually evolving panorama of digital assets means companies need to remain agile and engaged with regulators to successfully navigate this dynamic space. The future of CBDCs in Australia, therefore, appears to be an exciting yet intricate journey.
Source: Cryptonews
