Blockchain Bites: Government reports galore, Federal Budget FinTech focus, and regulator crackdowns


Authors: Michael Bacina, Louisa Xu, Tom Skevington

Service: Blockchain | FinTech | Regulatory Compliance & Investigations
Sector: Financial Services | IT & Telecommunications

Michael Bacina, Tom Skevington, Louisa Xu, Jade McGlynn and Marc Kopelowitz of the Piper Alderman Blockchain Group bring you the latest legal, regulatory and project updates in Blockchain and Digital Law.

Steering Committee sets the RegTech ball rolling towards a blockchain powered future

While blockchain has yet to cross the line into broad acceptance, in February 2020, the Australian government placed its confidence in the technologys revolutionary potential with its release of the National blockchain roadmap. The first step includes the formalisation of the National Blockchain Roadmap Advisory Committee and renaming it the National Blockchain Roadmap Steering Committee (The steering committee).

Four working groups have been announced to support the committee, including:

  • The Supply Chains Working Group (established August 2020) which will investigate the potential for blockchain technology to support trusted supply chains, with an initial focus on the agriculture sector.

  • The Credentialing Working Group (established August 2020) which will investigate using blockchain to support credentialing in the education sector.

  • The Cybersecurity Working Group (established October 2020) which will investigate the potential for blockchain technology to bolster cybersecurity and;

  • The RegTech Working Group (established October 2020) which will investigate the potential for blockchain technology to help businesses in meeting their regulatory compliance obligations in more secure and efficient ways.

Our own Michael Bacina has been named a key contributor to the RegTech Working Group, following on from his testimony before the Senate Committee inquiry into FinTech and RegTech last year. Michael will be serving alongside a range of well respected and well known blockchain figures identifying RegTech use cases and challenges so that Australia’s blockchain future can be unlocked.

Dick Smith scam advertising garners lawsuit against The Guardian

Dick Smith, the owner of Dick Smith Electronics and Australian Geographic, is threatening to sue The Guardian due to false advertisements appearing on their website which promote a common scam which in turn suggests Smith supports a cryptocurrency “investment” which is in reality a scam.

The advertisements feature Smith’s image and link to stories which mimic legitimate news articles, except these “how to make money easy” and getting “rich in a few days” use fake quotes from Smith endorsing investment in cryptocurrencies. The “investment” is of course not in any actual cryptocurrency but is simply a scam.

In response, Dick Smith’s legal team is threatening to commence defamation proceedings if they do not receive a satisfactory response from The Guardian. Mark O’Brien, a lawyer acting on behalf of Smith, stated in a letter to the Guardian’s editor:

“Mr Smith is determined to ensure the cryptocurrency scam comes to a permanent end … While we acknowledge that The Guardian Australia does take the fraudulent advertisements down once notified, that does not prevent your Australian readers from falling victim to this prolific cryptocurrency scam.”

Work smart not hard: Productivity Commission publishes paper on RegTech

Aimed at championing the opportunities presented by regulatory technology – the use of cloud computing technology to help businesses comply with regulations efficiently and less expensively, the Australian government’s Productivity Commission has recently released an information paper informatively titled “Regulatory Technology” detailing where regulatory technology (RegTech) has been useful and offers further potential.

The paper provides different examples of instances where RegTech has been useful, and has further potential, highlighting that this is most often present where:

  1. regulated parties face complex or onerous regulatory requirements

  2. there is scope to undertake more risk-based approaches to regulation

  3. technology can help to better monitor activity, including by overcoming constraints related to physical presence

  4. technology can safely unlock more uses of data to meet compliance goals

Using Blockchain as an example, the paper suggests that is blockchain is one of many useful RegTech tools that has:

“improved the agility of processing, speed of reporting and monitoring, integration of technological solutions and quality of analytics using digital information and big data”

The paper refers to the Swedish Land Registry as an example, which has begun its official use of blockchain to register land and property ownership on a small-scale. This is an ideal use-case for how technology can be used to register physical asset transactions and more specifically, how blockchain can be used to make compliance with regulatory requirements on property transfer more efficient.

DeFi takes on traditional finance; the regulatory challenges

Synthetix, one of the largest decentralised digital asset derivatives exchange recently received mainstream media attention for driving the growth of a $US10 billion ($14.2 billion) the decentralised finance industry, commonly referred to as DeFi.