Embracing the new Economic Reality

For several months the team at Projects RH have been working with our clients on how to embrace and financially benefit from the application of technologies which are no longer emerging but ever present. These technologies are:

• crypto currencies
• blockchain
• Smart contracts
• decentralised finance[1] [2]

For some time, we were thinking they were futuristic and emerging. A few weeks ago, we were surprised, if not shocked, and one of our clients had been accepting payment via crypto currency for more than 18 months and they had a relationship with their bank whereby payments received in crypto currencies would automatically be converted by their agent into Australian dollars and transferred to the company. When quizzed why the answer was surprisingly simple:

• if fast and cost effect
• it’s easy
• we are now all in the tech business

The exciting new world of technology

We live in 2022 and crypto, blockchain, smart contracts and decentralised finance are no longer dark secrets but are rather cost-effective methods of international and even domestic transactions.[3]

The fundamental change which has occurred is the banks have facilitated a cross between the digital world and theirs. This cross may be limited but it has begun, and it will only continue to grow.

We are again seeing a government is lagging the market in the development and acceptance of financial disintermediation by the use of technology. I say again because I was feeling the same thing in carbon credits and markets developing far faster than the regulatory environment would give us credit for. We believe we will all see a repeat of international markets determining how the world of Web 3.0 works before regulators get there.

Projects RH’s clients are seeing not only disintermediation but the emergence of new markets new investors and new investment opportunities. Much like Covid-19 when we commenced working from our desks at home, we were able to attend videoconference meetings as easily with people in different parts of the world as we did with those in the next suburb. I was amazed when I was in Miami in January, 2022, that an investor I was scheduled to meet announced the night before our meeting that there had been Covid in his office and therefore he would not be attending it but we could do the meeting by Zoom. I guess I was waiting to be invited to a coffee shop! The world has changed we have continued to work together, and we are still yet to shake hands. The new world conveniently referred to as Internet 3.0 is making all this possible.

Seize the day

We may lack the regulatory environment, but it does not mean that the commercial activity is not occurring.

Statements from financial luminaries such as Janet Yellen, United States Secretary of the Treasury, that working out how to do a sovereign coin and provide the infrastructure for it may take 5 to 7 years, unfortunately, are not realistic. It is a little like Governor Philip Lowe´s statements that the RBA would not raise interest rates for some time and then suddenly we started hearing announcements that the market is moving, and the central bank is behind what is going on. It is having to catch up.  In March the Biden Administration announced it would like to see the “responsible development of digital assets” only a few days after Britain’s Chancellor of the Exchequer, Rishi Sunak, indicated that he wanted to regulate “stable coins”.[4] We know in the case of Australia the horses bolted. The ANZ has already issued an Australian dollar stable coin and CBA’s proposed app[5] will let access coins by the bank on our phones.

 Today Crypto is Expensive

Today settling transactions using the Ethereum platform can be expensive – say USD 70 per transaction, however, this may not be may not be as expensive as it first appears as it does not have a rising scale given the size of the transaction. For Projects RH’s clients the important reality is that this cost is likely to fall as new technology is applied at Ethereum the year. [6]

 With or without you

We need embrace a new technology and know that the rules will follow. It is clear that the international accounting standards are going to need us to report on I use and holdings of crypto currencies. For financial institutions and investors, they are clearly a separate class of assets.

In Australia it is unclear who will be the 1^st to regulate crypto currencies and financial disintermediation using distributed finance. We have been surprised to see that central bankers, APRA, ASIC, ACCC … Have not let that the opportunity of regulating this in Australia. AUSTRAC indicated he wants to play a role and naturally the ATO wants to tax the transactions. We think it is inevitable that eventually central banks will issue and regulate coin (we suspect it will begin with a central bank issued stable coin in the country’s currency). In the case of Australia, the ANZ has led the way and is likely the other major banks will follow with the RBA having percent some sort of rules and regulations.[7]

No doubt as more coin ATMs emerge in shopping centres and increasing amounts of financial disintermediation including lending occurs in the crypto markets, there will be a strong call for regulation and that will be met. If Australia wishes to be a leader in this financial area it needs to be a leader in the regulation to create a level playing field for participants and their clients.

Whilst the call for regulation has begun in the United States it will no doubt follow in Australia. [8]

By Paul Raftery

CEO, Projects RH, based in Sydney. 14^th April, 2022

If you have any questions, please call +61 451 523 547.

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[1]  Ricardson, T.; Crypto investment boss tips blockchain to grow – Financial Review, 4/5/2022.

[2] Whyte, J.; DeFi a challenge to whole finance stack – Financial Review, 4/7/2022.

[3]  Sier, J; et al Crypto no longer on the fringe – Financial Review, 4/7/2022.

[4]  Eyers, J.; & Vickoovich, A; Urgent call to join crypto start-up race – Financial Review, 4/6/2022

[5]  Kehoe, J.; CBA crypto app faces ASIC wrangling – Financial Review, 4/7/2022.

[6] Lubin, J., and Eyers, J.; BANKING SET TO TURN ON ITS HEAD – Financial Review, 4/7/2022,

[7]  (Editorial) Australia’s crypto chances require the right rules – Financial Review, 4/7/2022,

[8] Sun, M; Call for regulatory guidance as cryto market grows, The Weekend Australia, 9-10 April, 2022, p. 37. (reprinted from the Wall Street Journal)