Australia could lose $17B from tokenized finance

A report from the Digital Finance Cooperative Research Centre and the Digital Economy Council of Australia finds the country could forfeit A$24 billion annually from tokenized finance unless regulators provide clearer rules on licensing, custody and stablecoins. The report identifies regulatory uncertainty as the main barrier that prevents banks and institutional investors from committing capital to tokenized markets.

The report, titled “Unlocking Australia’s $24b Digital Finance Opportunity,” explains tokenization as the recording of traditional securities and assets on blockchain-based systems. It estimates the A$24 billion opportunity comes from three sources: more efficient financial markets, faster cheaper payments, and new digital services enabled by programmable assets.

For market efficiency, the report says tokenization can automate settlement processes, reduce operational costs and broaden investor access to assets such as foreign exchange, equities, government debt and investment funds. These changes could increase liquidity and make trading in those assets easier.

On payments, the authors point to tokenized money, including stablecoins and wholesale central bank digital currencies, as a way to shorten settlement times and reduce reliance on slow correspondent banking networks for cross-border transfers.

The report also highlights programmable assets. Smart contracts or similar software could automate collateral management, margin calls and settlement. The report estimates that almost half of the projected gains tied to assets would come from new activities enabled by tokenized infrastructure, including collateralized lending, repo markets and invoice financing.

Regulatory gaps are described as the central problem. The report lists unclear licensing rules for trading venues and service providers, unresolved legal status for tokenized products, weak coordination between regulators and industry, and a shortage of large-scale pilot programs. These gaps, it says, make large financial institutions reluctant to build the infrastructure and accept the legal and operational risks needed to scale tokenized markets.

The report estimates that if policy reform does not proceed, Australia could capture only about A$1 billion of the potential A$24 billion by 2030. In that scenario, the report says many pilot projects would not scale, institutional capital would remain on the sidelines and innovation could shift to jurisdictions with clearer rules.

Industry options set out in the report include defined licensing pathways for digital-asset platforms, custody rules that address security and segregation of client assets, a coherent regulatory framework for stablecoins covering issuance and reserves, and proportionate consumer and investor protections. The report also recommends more specialized regulatory sandboxes for tokenized securities and settlement systems to allow testing under supervision before full licensing.

The authors cite existing Australian experiments such as Project Acacia and earlier Reserve Bank of Australia trials on wholesale CBDCs, and note the Australian Securities and Investments Commission’s Enhanced Regulatory Sandbox as a starting point for further targeted trials. The report calls on policymakers to set clearer rules so institutions can assess and deploy capital for tokenized finance in Australia.