A fit-for-purpose regulatory framework is all that stands in the way of Australia’s crypto industry outgrowing the tourism and energy industries by 2030, according to a new report from Ernst & Young.
In a new report released on Tuesday, analysts at EY suggest that Australia’s crypto industry is on track to contribute $68.4 billion to the economy by 2030, a solid 2.6% slice, along with 206,000 new jobs.
The report sets some lofty expectations for the sector which, by 2030, EY suggests could outgrow Australia’s tourism, agriculture and energy industries.
In terms of employment, the EY report found that the industry has already been responsible for adding about 11,600 jobs to the economy, which is suggested to swell to 37,800 by 2025, and then 205,700 at the end of the decade.
That step-change growth projection more than triples the industry’s contribution to the Australian economy from the $2.1 billion generated by digital asset-related activity in 2021, to an estimated $7.6 billion each year after that.
James Manning, founder and CEO of Mawson Infrastructure Group, the outfit responsible for Australia’s largest Bitcoin mine, said the industry’s potential is clear but remains stuck at “a crossroads” waiting on workable regulation.
“As an industry, we desperately need a fit-for-purpose policy and regulatory framework to provide greater security and certainty to consumers and the crypto industry,” Manning said.
“The Bragg Report recommendations, in particular, represent a significant coming together of industry, regulators and government,” he said.
“The Bragg recommendations, if adopted, will revolutionise the Australian crypto sector and improve consumer protection, therefore driving innovation, confidence and growth in the sector.”
Just last week, Treasurer Josh Frydenberg announced that the government will act on a selection of the recommendations made by the Bragg report in October.
Early next year, Treasury will open the consultation process on a new exchange licensing framework for the Australian crypto sector, which is currently unregulated and holds billions of the $US2 trillion worth of assets held globally.
Frydenberg said Treasury will also roll out a new custody regulatory regime for the exchanges which will aim to add clarity to the way assets are held and protected in Australia.
Steve Brown, strategy and transactions partner at EY, said the policies that come as a result will be crucial to seeing Australia’s crypto industry live up to its potential.
“Overall, our analysis finds that the cryptocurrency and digital asset sector could provide significant economic benefits to the Australian economy moving forward, but that Australia does not yet have fit-for-purpose regulatory systems to promote certainty for new businesses, investors and consumers in the digital asset space,” Brown said.
“Well-designed standards, robust regulation and the right policy settings will be needed to drive innovation while managing unfamiliar services and providing proper safeguards,” he said.
“This will be pivotal to unlocking benefits to businesses and consumers as financial markets become more dispersed, more digital and more crypto-intensive.”
Liberal senator Andrew Bragg said his recommendations could put Australia in position to boost the crypto industry’s economic footprint “30-fold” over the next decade.
Beyond adding jobs, the EY report also suggested that building out a sizable crypto-mining industry in Australia could put downward pressure on electricity prices and assist the economy’s transition to net zero.
“Unlike commodity mining, crypto-mining may be easily switched on and off in response to fluctuating electricity demand, supply and prices,” the report said.
“This means that it is well-suited to reduce volatility in electricity prices by using excess electricity during off-peak periods of low demand such as during the night and switching off operations during periods of high demand such as hot and cold days.”
The report pointed to Mawson’s recent partnership with Quinbrook Infrastructure, which uses under-utilised renewable energy assets to power Australia’s largest, 20-megawatt Bitcoin mining facility located in Byron Bay.
In October, Mawson’s chief commercial officer Nick Hughes-Jones said the move could see Australia thrust Bitcoin to the forefront of the nation’s decarbonisation efforts.
“So, we have a view as a business that Bitcoin mining can actually lead the transition to a decarbonised society, because renewable energy will ultimately be the cheapest energy,” Hughes-Jones said.
This article was originally published on Business Insider Australia.