Australian Securities Exchange takes step towards tokenized asset trading

Australian Securities Exchange takes step towards tokenized asset trading

“There’s a strong value proposition here that we can essentially tokenize any asset and bridge that into the ASX ecosystem,” said Zerocap CEO Ryan McCall.

Companies on the Australian Securities Exchange (ASX) could be able to trade tokenized bonds, equities, funds, or carbon credits after a successful proof-of-concept trial led by the digital asset investment platform Zerocap.

On Monday, Melbourne-based digital asset investment platform Zerocap told Cointelegraph it had successfully used Synfini to bridge over its custody infrastructure onto the platform as part of a trial program, allowing for the trading and clearing of Ethereum-based tokenized assets.

The trial is part of ASX’s distributed ledger technology (DLT)-based settlement project Synfini which was launched in November. The platform offers clients access to ASX’s DLT infrastructure, data hosting and ledger services, enabling them to build blockchain applications off of it.

Zerocap co-founder and CEO Ryan McCall stated that it occurred last year and that “it got a lot of interest” in the institutional sphere, particularly from companies that are exploring ways to tokenize and trade bonds, funds or carbon credits.

“Thinking beyond Bitcoin, Ethereum and other crypto assets, the tokenization of bonds, equities, property, carbon credits, private equity, and anything that’s essentially illiquid, there’s a strong value proposition here that we can essentially tokenize any asset and bridge that into the ASX ecosystem.”

McCall outlined that the companies dealing with especially “opaque and difficult to access markets” such as bonds and carbon credits are seeking out ways to efficiently cut costs, save time on issuance and open up broader investment access via tokenized offerings.

Questioned on whether the ASX would be able to offer crypto trading via Synfini, McCall stated “yes” but that he hasn’t seen any indicators of interest in this field, as the ASX and others are primarily focused on tokenizing traditional/real-world assets.

It is worth noting however that Synfini is a separate initiative from ASX’s blockchain-based CHESS system replacement that is yet to be implemented after facing years of technical issues.

McCall went on to suggest that Zerocap could be looking to officially launch asset tokenization and trading services via Synfini to institutions in the near future, as it has just cleared the necessary steps for legal approval.

“Since then we’ve been going through the certification process to get into the production environment, which as you can probably imagine, for any sort of enterprise software, but certainly for an exchange, it’s a fairly stringent process. So we’ve just cleared the production certification. So getting ready to deploy this now,” he said.

McCall also highlighted that with the ASX being a reputable source to host digital asset trading, doing so would likely dampen institutional concern over counterparty risk relating to the crypto sector.

Such risks have been thoroughly prevalent this year due to several major crypto firms either facing liquidity issues, or going completely bankrupt in the case of Celsius, Voyager Digital, and Three Arrows Capital.

“So counterparty risk, you know, credit risk specifically I guess is the biggest talking point in crypto at the moment with the 3AC disaster. And I think that just demonstrates the use case for what the ASX is trying to do here.”

“You know, thinking about the ecosystem and investor protections and all the things that it offers, there’s definitely a need for something like that in digital assets,” he added.

The Zerocap CEO also suggested that Synfini will likely be utilized by a wide range of firms, as the platform is user-friendly and removes a lot of variables for companies.

“If a custodian or a fund manager or any application developer wants to come and build a blockchain application, they can do that on this Synfini platform without having to really worry about managing any of the infrastructure, which is pretty cool,” he said.

Related: ASIC chair troubled by sheer amount of ‘risk-taking’ crypto investors

Zerocap recently had a hand in a tokenized carbon credit transaction in late June, with the firm providing market-making services and liquidity for an exchange between major Australian family office Victor Smorgon Group and BetaCarbon, a blockchain-based carbon trading platform.

The deal was also facilitated via A$DC, a fully AUD collateralized stablecoin developed by “big four bank” Australian bank ANZ.

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How blockchain can address Austria’s energy crisis

How blockchain can address Austria’s energy crisis

In the future, energy communities should make a greater contribution to the energy transition.

Climate change has become one of the biggest global challenges for humanity. At the same time, the dependence on hydrocarbon energy sources such as coal, oil and natural gas is still strong.

Supply lines around these energy sources are further vulnerable to geopolitical tensions. Due to the current sanctions against Russia, experts now expect rising electricity prices and negative effects on the energy market in Europe.

The Austrian government understands the urgent need for the energy transition and has set the ambitious goal of being climate neutral by 2040. Alternative solutions to fossil energy have been slow to emerge and, for the most part, are not yet efficient enough on a large scale. But there are promising approaches — especially in the form of decentralized renewable energies or blockchain technology in peer-to-peer (P2P) energy trading.

There are already pilot projects in Austria dealing with P2P trading on the energy market. At the forefront are blockchain scale-up Riddle&Code and Austria’s largest energy provider Wien Energie, which founded a joint venture in 2020 called Riddle&Code Energy Solutions.

As of April 1 of this year, Kai Siefert is the new head of the joint venture. He was formerly an IT strategist at Wien Energie and worked on the energy tokenization platform MyPower in Vienna. Cointelegraph auf Deutsch caught up with Siefert to ask how we can combat the energy crisis with the help of blockchain.

From pilot project to solar tokenization 

Wien Energie and Riddle&Code have been working together for a long time. Back in 2017, the companies launched the first project called Peer2Peer in Quartier where they tokenized photovoltaic solar systems so that consumers can participate in energy production. 

Later, at the end of 2018, when Siefert was still Wien Energie’s IT strategist, his team developed a blockchain strategy together with Astrid Schober, head of IT at Wien Energie, and focused on the topic of energy tokenization with security tokens and utility tokens.

This resulted in the MyPower platform. First, Wien Energy and Riddle&Code tested the decentralized trading of self-generated solar power via blockchain in a smart city project with 100 participants. Everything went smoothly, and in 2021, a tokenization platform for photovoltaic plants was launched. Riddle&Code tokenized the largest solar plant in Austria and gained 1,000 customers who, as part of its advertising campaign, bought energy vouchers issued by Wien Energie in the form of tokens, which could be used to pay electricity bills.

Now MyPower tokenizes solar photovoltaic assets across the whole of Austria, allowing consumers to benefit from partial ownership and invest in renewable energy sources.

Demand for renewable energy is huge

According to Siefert, the concept of energy sharing is very much in demand at the moment. Due to Russia’s invasion of Ukraine and the coronavirus crisis, electricity prices are skyrocketing. Rising energy prices can be mitigated with cheaper renewable energies, smart information technology and energy sharing. 

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With blockchain-based energy sharing, jointly generated electricity is fed into the grid, distributed and sold directly to flats — all without an intermediary. Kilowatt-hours not consumed can also be sold to other energy communities, and thus, consumers earn or save money.

Energy sharing can enable direct energy trading between energy consumers (energy producers and end-consumers), who can use this approach to take control of their generation and demand. People who rent instead of owning their homes can actively participate in the energy transition and benefit from the proceeds. This gets consumers more involved in their own generation and puts local value creation at the center.

“You don’t need to buy natural gas from Russia or oil from Saudi Arabia to create energy here in Europe,” Siefert said. “The sun comes virtually for free and reliably produces electricity. But many people can’t participate because they don’t have their own house, but live in a rented flat or simply don’t have the means to buy a large solar system. However, we can divide these plants into small digital asset tokens so that private investors with little capital can also participate.”

Renewable energies “are coming into focus”

In Austria, there are already small renewable energy communities such as Erneuerbare-Energie-Gemeinschaften (EEG). Such energy communities (in Austria and according to the Renewable Energy Expansion Act) are nonprofit-orientated legal entities intended to decentralize the generation, distribution and consumption of renewable energy mainly for the public benefit. Such EEGs still play a small role in production, local and regional distribution, and consumption of renewable energy and are often not very profitable.

However, things are starting to develop. According to Siefert, the demand for EEGs has already increased enormously due to rising energy prices, and Riddle&Code Energy Solutions offers technical solutions for setting up and onboarding such EEGs. “We can also connect them to decentralized marketplaces with our system,” Siefert said. This is already possible with the Renewable Energy Expansion Act, which has been in force since 2021 and is a European Union directive that has been transposed into national law.

Siefert noted an “increasing interest in interesting in renewable energies” — in Austria, Europe and worldwide. Companies working in the field of renewable energies “are now coming into focus,” as they are benefiting “from the large investments favored by climate policy worldwide,” Siefert said.

Real-time data signed and encrypted on the blockchain

At the moment, P2P energy trading is not yet allowed in Austria. Everything works on the basis of the current electricity market infrastructure, and billing data is made available by the grids 24 hours after it has been measured. 

But Riddle&Code Energy Solutions can already take this data in real-time. A dongle that can be connected directly to the smart meter reads data live from the customer interface and sends it via a trusted gateway — signed and fully encrypted on the blockchain. From there, this data can be read out immediately. Customers can see every quarter of an hour how their credit grows in kilowatt-hour tokens.

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This data cannot be used for billing yet, but it helps to incentivize the right consumption behavior. Thanks to such data, the customer can see how much green energy they have on the grid from the community installation and, for example, use this time to turn on the washing machine or charge an electric car. This, in turn, has an indirect effect on the bill because customers then pay less if they use more electricity from their own shared forms.

“Our goal is that everyone can participate in energy sharing,” Siefert said. “But private P2P trading is currently not possible in Austria until legal regulation is created. That is why I would like to see more freedom here from the government side and more speed in the expansion of renewables. Austria can become one of the leading nations in the EU and worldwide in terms of P2P energy trading and the development of energy communities.”

This is a short version of the interview with Kai Siefert. You can find the full version here (in German).

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Australian regulator trials auto take-down of crypto scam sites

Australian regulator trials auto take-down of crypto scam sites

The ACCC is using a countermeasures service from the U.K.-based Netcraft, which has been providing a similar service to the U.K.’s National Cyber Security Centre.

Cybersecurity specialists have welcomed a new trial by the Australian Competition and Consumer Commission (ACCC) to automatically take down scam websites. The trial saw dozens of scam sites, including crypto scams, knocked offline after more than 300 were reported.

The ACCC reported that Australians had lost $113 million in cryptocurrency scams last year. The new trial will be in partnership with the Australian Securities and Investment Commission (ASIC) and will focus on efficiently removing scam websites once they have been reported to Australian regulators to protect potential investors from falling victim to crypto fraud.

The ACCC is using a countermeasures service from the United Kingdom-based Netcraft, which has been providing a similar service for the past four years to the U.K.’s National Cyber Security Centre.

According to an IT News report, sites already taken down include “phishing sites impersonating Australian businesses and government authorities,” along with “puppy scams, shoe scams, cryptocurrency investment scams and tech support scams.”

Ken Gamble, executive chairman of private intelligence firm IFW Global, praised the development. He told Cointelegraph this is “the best news he has heard,” as he had “seen the damage these sites made by sophisticated fraudsters have done using state of the art digital marketing techniques:”

“These crypto scam websites are unregulated, organized by criminal groups, many residing in Eastern Europe, who operate call centers, taking millions from mums and dads across the world every day.”

Gamble said that Australian government agencies also need to be open to collaborating with the private sector to see real success.

“We need law enforcement involved and collaborate with different countries […] many of these major cryptocurrency exchanges aren’t helpful with fraud investigations, making our investigations a lot harder than necessary.”

Researchers and romantics beware

Gamble said that individuals researching cryptocurrency are often targeted with Facebook advertisements “luring them in” with “Hollywood style professional videos,” convincing them how easy it is to make money:

“If somebody is wanting to invest $10,000 into cryptocurrency, they should spend $1,000 doing due diligence checks to ensure it is a legitimate platform […] if it turns out to be a scam, it will be the best $1,000 they will have ever spent.”

He said those investing in cryptocurrency should do their own due diligence as many websites clone bigger companies to scam potential investors. He said potential investors at a bare minimum should “do checks to make sure the platform is regulated, with all the correct financial license numbers.”

A representative from Cyber Trace, a team of private investigators specializing in cryptocurrency fraud, told the Cointelegraph that “romance baiting” is the most common cryptocurrency scam.

This involves victims talking to a romantic interest online who helps them sign up to a major cryptocurrency exchange after telling the victim they have made “great returns on investment.”

The fraudster will then ask the victim to send “a small amount of up to $200” to their platform, where “they will fiddle around the numbers on their end to show the victim they have already made a profit, offering them to withdraw this amount to gain their trust.”

Once the victim sees how easy it is to make a profit and withdraw their funds, they begin to invest “more and more… and don’t get much out after that point.”

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Australian central bank governor favors private sector crypto technology

Australian central bank governor favors private sector crypto technology

Phillip Lowe believes that there are risks in dealing with cryptocurrency that can be mitigated by strong regulations, but the tech should be made by private companies.

Australian central bank Governor Phillip Lowe said that a private solution “is going to be better” for cryptocurrency as long as risks are mitigated through regulation.

Lowe commented at a recent G20 finance meeting in Indonesia. Reuters reported on July 17 that officials from other countries discussed the impact of stablecoins and decentralized finance (DeFi) on global financial systems.

Recent risks associated with stablecoins can largely be chalked up to depegging events. In May, the Terra USD stablecoin UST, which has since changed to Terra Classic USD (USTC), lost its peg and drove down the value of the entire Terra Classic ecosystem. It caused a multi-billion dollar cascade effect leading to Tether (USDT) and the DEI stablecoin briefly depegging.

Lowe suggested that strong regulations or even state backing could help mitigate the risks to the public.

“If these tokens are going to be used widely by the community, they are going to need to be backed by the state or regulated just as we regulate bank deposits.”

While the regulations would come from the government side, Lowe noted that the technology would be best if it were developed by the private sector. In his view, private companies are “better than the central bank at innovating” the best features for cryptocurrency.

He added, “there are also likely to be very significant costs for the central bank setting up a digital token system.”

The National Association of Federally-Insured Credit Unions shared Lowe’s skepticism about implementing a digital token at central banks due to high costs in a letter to the U.S. Commerce Department, according to Cointelegraph on July 8.

However, his view on the costs of digital token systems at central banks is not echoed by the countries currently developing or experimenting with central bank digital currencies (CBDC), such as China, the European Union, and the Bahamas.

In the same G20 meeting, Hong Kong Monetary Authority CEO Eddie Yue backed Lowe’s opinion that stablecoins should be scrutinized more closely. He said that reliable stablecoins would, in turn, reduce risks in DeFi, where stablecoins act as the main transactional currency.

Related: Aussie FPA supports ‘crypto rule book’ and regulation of exchanges

Referring to DeFi and stablecoins, Yue said, “the technology and the business innovation behind these developments are likely to be important for our future financial system.”

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