A senate inquiry led by Liberal Senator Andrew Bragg is approaching its final stages and prepares to make its recommendations around the regulation of the burgeoning cryptocurrency space in Australia.
With some reports suggesting up to 1 in 5 Australians own or intend to own cryptocurrencies, regulation is almost inevitable. Regulation may further accelerate broader adoption as it is likely to be seen as legitimising cryptographic technologies and spur investors interest in their use. As with many technological advances, the first iterations often involve a relatively steep learning curve for users. With any form of regulation often comes the need to educate its stakeholders which will bring some much-needed guidance around the many grey areas relating to cryptographic technologies.
Whilst cryptocurrency exchanges have enabled users to more easily acquire digital assets through AUSTRAC approved ‘on ramps’, moving those assets to secure storage seems to be beyond many investors capability.
Trading assets can be carried out with the click of a button, however, understanding the tokens underlying technological value is often difficult to understand for the average investor. The lack of clear, readily digestible, performance-related data has meant that social networks have descended into platforms for internet shills to promote their favourite token of the month. Notably, the late John McAfee was awaiting extradition to the US at the time of his death in relation to tax evasion and securities fraud relating to touting some digital assets.
Regardless of the lack of regulation some technologies like Ethereum are making significant advances towards mainstream adoption and potentially mark a seismic shift in the way financial transactions are carried out worldwide.
Ethereum continues to gain the support of big business as associated networks like India based Polygon announce direct collaboration with major players like Ernst Young. Even Fintech industry stalwarts like Visa have widely acknowledged the potential for a global shift towards digital currencies and commented on the use of Ethereum and Polygon in a published research paper.
It is an interesting time for established players like Visa and new powerhouses like Stripe who may have their business models significantly disrupted should cryptographic technologies such as Ethereum and Polygon continue to gain momentum.
Ethereum, a network secured by thousands of ‘miners’ worldwide using powerful processors and enormous amounts of energy is working to shift from Proof of Work consensus mechanism to Proof of Stake. The result of this shift will dramatically reduce the computational power and therefore energy requirements to secure the network.
The shift to Ethereum 2.0 also marks a significant upgrade in capacity for the network to progress towards its mid-term goal of achieving a processing capacity of up to 100,000 transactions a second, with each transaction potentially costing just a fraction of a cent.
A proposed date for ‘The Merge’ is potentially being discussed in Core Developer Call 124 on 15th October 2021.
The fintech industry will be watching closely.
Watch the call live here