What Australian entrepreneurs need to consider in 2023, writes Leigh Travers, Chief Executive Officer at Binance Australia.
There’s no doubt the last six to 12 months have proven challenging for the crypto community globally, with founders, users and investors rolling with the punches of a bear market but still striving towards a vibrant ecosystem. The short-term effect is slowing growth as we’ve seen companies shrinking operations, narrowing their product suite and slowing funding towards Web3 projects. However, the longer-term trend remains strong, and we see the crypto ecosystem becoming more resilient as regulatory wheels start turning in motion.
We are now well into double-digit percentages of Australians owning some cryptocurrency (Statista cites 25.6%). While the number of holders has experienced a drop from the peaks last year, there is a clear positive trend on a multi-year time horizon. Convincingly, data from a 2022 ASIC survey found that crypto was the second most commonly held investment after Australian shares.
As we move into the new year, Binance Australia believes that collaboration with all stakeholders interacting with Web3 will positively impact the ecosystem’s sustainability and ensure a safer and fairer market for all Australians.
Australia’s journey to build a steady regulation ecosystem
A digital asset exchange’s role, first and foremost, is to protect and serve its users. There is a responsibility for every major platform to collaborate with policymakers and regulators to contribute to the development of a regulatory framework with consumer protection and market integrity at its heart. Compliance is a collaborative process, and as a leading platform in the domestic market, Binance Australia wants to ensure consumers are benefitting from Web3 by making it accessible to everyone in a safe way.
Locally in Australia, the government has acknowledged and will work to establish a digital assets framework in 2023. Significantly, the government will prioritise and assess its ongoing “token mapping” work with the industry players and has committed to introducing a licensing regime for digital asset service providers. This is regulation that Binance Australia wants to ensure a sustainable crypto ecosystem in Australia and to ensure there isn’t regulatory arbitrage from overseas operators.
Globally, governments will be looking towards Europe for developments in the Market in Crypto-assets Regulation (MiCA) which is expected to enter force in the first half of the year. The enforcement of these frameworks is likely the first comprehensive regulatory regime tailored specifically to protect investors of digital assets and ensure financial stability while still facilitating space to foster innovation.
Adopting these measures will result in the growth of an industry where Web3 technology, such as digital assets, can operate effectively. Ultimately, we welcome the Australian government’s decision to pursue well-considered regulation in Australia in harmony to provide the utmost security for users and create a fertile ground for innovation within the ever-changing and growing crypto market.
To the nation’s financial freedom and beyond
Given that the concept of crypto has been thoroughly based on lowering barriers to entry and helping increase financial freedom, it’s no surprise that people are joining the industry with relatively limited knowledge of navigating safely. Ultimately, individuals should Do Your Own Research (DYOR) to reflect on the core ethos of crypto – don’t trust, verify.
Even as fear, uncertainty and doubt circulate the market, business leaders should not confuse volatility or the behaviour of bad actors with the potential use cases of digital assets and the underlying technology. Web3 is now widespread; on the back of the breakthrough of NFTs into global popularity, leading major brands like the AFL to explore how they can implement Web 3 technologies into their platforms, products and operations.
And while NFTs and fan tokens have come into trend through our love of sport, market interest is high in digital identity solutions such as Soul bound tokens. Soul-bound tokens are similar to NFTs but cannot be transferred and are used to verify users’ identities to authenticate achievements, wallet addresses, and trades. This is particularly important to reduce risks around handling private and sensitive personal identification documentation and remove the friction around using new services and products.
So, what happens next?
New technologies are built to be disruptive and challenge the foundations of the status quo. For Web3, we are in the midst of a time where institutions, communities and businesses are exploring the roles each plays in the growth. The ecosystem will grow stronger as regulatory frameworks are developed, and the industry continues to evolve toward greater decentralisation. With blockchain being a borderless technology, Web3 is here to stay. We certainly welcome discourse to get governments, regulators and industry players on the same team to construct an ecosystem where users are secure and comfortable in the crypto market going into 2023.
Leigh Travers is Chief Executive Officer at Binance Australia