Blockchain Technology: Australian Government Questions Adopters

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I can say for a fact that by now it’s common knowledge among all Cryptocurrency enthusiasts that blockchain technology is the main innovation behind virtual currencies. The blockchain provides proof of all the transactions on the network and can be viewed by the public. Many view this technology as only useful when it comes to commercial purposes but there are also non-commercial uses of blockchain technology. For example, last month Britain former Prime Minister Mr. David Cameron said that blockchain technology could be used in developing countries where corruption is rampant to fight it especially in government institutions.

Australian Securities and Investment Commission (ASIC) with the advent of financial technology innovation has released a document titled “Evaluating Distributed Ledger Technology”. Note that Distributed Ledger Technology (DLT) and blockchain are commonly used interchangeably because they almost have the same meaning and ASIC is targeting companies looking to leverage this technology. ASIC is Australia’s government body that’s tasked with regulating financial services and overseeing financial markets. So all Australian financial markets and securities such as investments are all regulated by the ASIC.

ASIC in this document do acknowledge that blockchain technology is currently being used in Australia in a number of areas which include foreign remittance payments and securities settlement systems. ASIC also points out that DLT is used across the borders in cases such as foreign currency markets and interbank payments. However, this document released by the ASIC contains six questions that the regulator — ASIC — is most likely to ask during its assessment for start ups and companies that may be considering the use of blockchain technology.

These questions include:

  • How will the DLT be used?
  • What DLT platform is being used?
  • How is the DLT using data?
  • How is the DLT run?
  • How does the DLT work under the law?
  • How does the DLT affect others?

The ASIC expects the range of potential application of DLT to grow exponentially over time. This growth is likely to have a far reaching implications for their stakeholders while affecting the way blockchain entities operate and the market structure in which they offer their services. This is probably the main reason why ASIC is pushing towards DLT regulations. ASIC is not trying to discourage the growth of blockchain technology but instead it’s encouraging innovative fintech considering the use of DLT to contact them via the Innovative Hub if they ever want to discuss their proposed business model.

The ASIC highlights the fact that its agenda is not to stand in the way of development and innovation but rather to work to harness opportunities and economic benefits. However, ASIC claims there is need to mitigate any potential risks of new business models through the use of new technologies. To all those people considering the use of blockchain in their businesses, ASIC recommends them to seek legal advice to determine whether they will be operating the business or providing services with the proper authorizations. To customers, it’s important for them to their own research on the technology or the firm offering to provide the technology services.

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