Category: Australia

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Australia Investing Regulation Scams

Australians Lost Almost $100 Million in 2021 to Crypto Investment Scams

Aussies lost more than A$2 billion to scams in 2021, including losses of A$84 million due to scammers seeking payment with cryptocurrency, according to an Australian Competition and Consumer Commission (ACCC) report.

The ACCC’s annual report on scams published on July 4 found that investment scams increased by 135 percent in 2021 and caused the most financial harm, resulting in A$701 million lost by Australians. 

This spike was driven specifically by crypto investment scams, which led to Aussie investors reporting losses of A$99 million – 270 percent higher than the previous year. 

The report tallies losses based on consumer reports shared with Scamwatch, ReportCyber, and 12 financial institutions and government agencies.

Common Types of Crypto Scams Aussies Fall For

Some of the most common ways scammers exploited Aussies’ interest in crypto to steal their hard-earned money include:

  • fake investment and crypto trading platforms, which sometimes mimic legitimate, well-known websites;
  • sales of fake crypto wallets;
  • tricking people into revealing their seed phrase for an existing wallet; and
  • offers to “help” people get set up on a crypto platform by remotely accessing their computer. 

Scammers typically contacted victims by phone, or through social media and websites. Crypto investment scams affected all age groups but people aged 65 years and over lost the most money (A$26.5 million). 

Combating Crypto Scams Requires ‘Urgent Work’

In her foreword to the report, ACCC deputy chair Delia Rickard suggests urgent work is needed to combat crypto investment scams:

The popularity and hype of cryptocurrency has led to a surge in losses to investment scams with combined losses of $701 million. At the same time, it is also becoming the preferred method of payment across all types of scams.

Delia Rickard, deputy chair, ACCC

While bank transfers remained the most common way scammers requested payment from victims in 2021, requests for cryptocurrency increased dramatically – up 216 percent. Earlier this year, the ACCC revealed crypto had surpassed bank transfers as scammers’ preferred payment method. 

Rickard also expressed her hope that government efforts towards licensing digital currency exchanges and custody requirements for crypto assets would slow the growth of crypto scams. Consumer groups have also called for Australia’s new Labor government to protect crypto investors through more stringent regulation.

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Australia Bitcoin Mining Crypto News

‘Black Mountain Energy’ Looks Set to Enter Bitcoin Mining in Australia

Black Mountain Energy, a US-owned resource company headquartered in Australia, has received a “non-binding” letter of intent from Highwire Energy Partners regarding collaboration for potential entry into the bitcoin mining industry.

The proposed location for the crypto mining project is a fracking site in the Kimberly region of northwest Western Australia; however, despite BME’s charter of “responsibly developed and environmentally conscious natural gas supply”, environmentalists claim the project will not benefit from emission reductions.

https://www.naturalfocusaustralia.com.au/western-australia/broome-and-the-kimberley/
BME is exploring project Valhalla in the Kimberley region of northwest Western Australia.

Flared Methane to be Diverted to Crypto Servers

Highwire Energy Partners will likely work with BME to divert flared methane gas from well-testing to power mobile cryptocurrency servers. This well-testing, and eventual project roll-out, is taking place at BME’s Valhalla Project fracking site in the Kimberley’s Canning Basin.

Rhett Bennett, BME’s chief executive officer, has stated that the process would likely aid in a reduction in emissions by avoiding flaring off the excess gas, allegedly reducing CO2-equivalent emissions by around 63 percent.

https://bm-resources.com/team/rhett-bennett/

Flaring natural gas certainly is not [Environment, Social and Governance]-friendly … so the ability to utilise that gas for power and ultimately create a product, in this form, is a much better solution.

Rhett Bennett, CEO, Black Mountain Energy

BME’s current negotiations involve the use of 5 terajoules of gas per day, which can supply up to 25 megawatts of power for the crypto servers. This translates into approximately A$100,000 worth of Bitcoin daily, providing BME uses the best available mining equipment.

However, anti-fracking organisations are retaliating against the plan, suggesting that bitcoin miners should have to use a renewable energy source rather than environmentally damaging fracked gas. As noted by Dr David Glance, director of the University of Western Australia’s Centre for Software Practice, mining operation computers established in hot and remote areas require more energy to cool.

https://theconversation.com/profiles/david-glance-148

From an environmental perspective, it makes absolutely no difference whatsoever if they burn the gas or they use it to mine cryptocurrency … It will still produce carbon dioxide.

Dr David Glance, UWA Centre for Software Practice

As it stands, the Valhalla project is yet to receive approval from the Environmental Protection Agency (EPA), which does not expect to have a report finalised until early 2023.

Other Energy Giants Mining Crypto

Black Mountain Energy is not the first company to utilise natural resources for crypto mining. In March, ExxonMobil diverted some of its unused natural gas to power mining operations in North Dakota, US. This was managed via a partnership with solutions specialist Crusoe Energy Systems, which converted the gas into mobile generators that then powered the mining operations.

Meanwhile, back in Australia, Canadian oil and gas miner Bengal Energy has commenced an assessment of the profitability of mining bitcoin from stranded gas assets in the Australian outback. The project has already led to the reassembly of previously out-of-operation gas wells in South Australia’s Cooper Basin.

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Australia Bitcoin Bored Ape Yacht Club Crypto News Cryptocurrencies Investing NFTs

Brisbane Man’s Crypto Bet Enabled Him to Buy a Home Mortgage-Free

In less than a decade, Brisbane IT specialist Joe Bridge turned a small-time household crypto mining hobby into an A$1.2 million profit that enabled him to buy a house outright along with two motorcycles and a pair of boats.

Bridge, now 38, was a law student living at home in 2013 when he installed mining software on three computers and used 10 graphics cards to generate Litecoin and Dogecoin.

Traded $LTC and $DOGE for ‘More Than a Dozen’ BTC

Although the power bills at his parents’ house in Paddington, in Brisbane’s inner west, ramped up to over A$600 per month, Bridge mined enough $LTC and $DOGE to trade it for “more than a dozen” bitcoins. He held on to the BTC until 2017 when the price began to spike, then invested some of his stash on motorbikes and boats.

Joe Bridge at his Clontarf home with one of his motorcycles. Source: ABC News / Alex Papp

By the time bitcoin hit its all-time high in November 2021, Bridge was able to cash out A$880,000 for a house at seaside Clontarf in Brisbane’s northeast, and still had enough left over to pay a $290,000 capital gains tax bill.

Cautionary Advice for Would-Be Investors

No longer active as a crypto investor, Bridge has cautionary advice for anyone thinking of buying the current dip in bitcoin’s price. “I think it’s a dangerous time to be getting into it,” he told ABC News last week. “I would imagine it’s possible [to still make money], though. [But] would I recommend it? No. I’m not currently participating.”

I do think there will be a shake-out and the speculative bubble that surrounds [cryptocurrency] will disappear. Perhaps from the ashes of that, something with real utility to humanity may arise, but there’s a lot of debate about what product that is. I don’t think it’s bitcoin.

Joe Bridge, IT consultant in financial software, former crypto investor
Crypto market cap since November 2021. Source: CoinMarketCap

More than a million Australians now own some form of cryptocurrency, according to a Roy Morgan survey conducted in February this year. However, chances are that none of them will ever get as lucky as Australian NFT collector Steve Morlando, who in May was able to turn US$300 into a whopping US$5 million when he bought a rare Bored Ape for what amounted to 0.01 percent of its then-current value.

Like Joe Bridge, Morlando plans to hang on to his investment “for a minimum of 10 years”.

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Australia Crypto News ETFs Investing Surveys

Millennials Prefer Crypto Over Investment Funds: Survey

A new survey conducted among young adults aged 25 to 40 in the US by French investment firm Alto reveals that more millennials are investing in crypto than in mutual funds.

According to Alto’s report, titled “How Millennials See Their Financial Future”, nearly 40 percent of the survey’s millennial respondents have invested in cryptocurrencies.

Coincidentally, the same percentage of Australian millennials indicated their preference for digital assets over real estate in a similar survey conducted by international crypto exchange Kraken almost exactly a year ago.

Another survey conducted by Australian online investment broker Pearler in May 2021 indicated that “a significant number” of Aussie millennials intended to retire at the age of 50 using their investments in exchange-traded funds (ETFs) and cryptocurrencies.

Current Market Conditions Dissuade Potential Investors

The 40 percent figure mentioned in the latest Alto survey also mirrors the proportion of American millennials who own stocks. The report notes that most millennials either already own crypto or are considering buying some, though Alto founder and CEO Eric Satz concedes that current conditions make it hard for them to consider investing:

In a world of conspicuous consumption, soaring living costs, and mounting student loan debt, millennials find it difficult to invest for the future because they are struggling to afford the present.

Eric Satz, founder and CEO, Alto Investing

Seven in 10 Millennials Intend to Add Crypto to Their Retirement Funds

Participants in the Alto survey who currently hold digital assets mentioned they were likely to add more crypto to their retirement portfolios. This cohort amounted to 70 percent of millennials surveyed.

Other key findings of the Alto survey included:

  • 74 percent of millennials thought that pouring money into the stock market should be considered gambling, whereas 70 percent were of the opinion that such actions were way too dangerous; and
  • 76 percent believed they could essentially be left without any savings if the bears continued to reign supreme on the crypto market.
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Australia Blockchain New Zealand Real Estate VeChain Western Australia

Australian Real Estate Body: Blockchain Will Revolutionise the Industry

A new report from the Real Estate Institute of Australia (REIA) confirms it is firmly in favour of blockchain adoption by the industry. The report outlines the various uses for blockchain in the sector as implementation methods become a hot topic.

Web3 Will Revolutionise Real Estate

The Blockchain: Opportunities and Disruptions for Real Estate report, released this week, details how the Aussie real estate industry can utilise blockchain tech to stay ahead of the game in an unstable market. The report is the result of a collaboration between REIA, REINZ (its New Zealand counterpart), and the RMIT (Royal Melbourne University of Technology) Innovation Hub.

REIA president Hayden Groves predicts that “fully integrated Web3 technology” will allow the industry to cope with rising interest rates, and housing affordability and supply issues. And according to Professor Jason Potts, co-director of RMIT University’s Blockchain Innovation Hub, blockchain has the potential to reshape customers’ experience into something far more positive:

https://rmitblockchain.io/jasonpotts

The time is right for Australia and New Zealand to become early adopters and in doing so provide more options for their customers such as tokenisation of real estate assets, which can lead to lower costs, increased liquidity, and therefore faster settlement times.

Professor Jason Potts, RMIT

However, Groves stresses that the research is only as good as the adoption, and that an implementation strategy is yet to be decided on. He wants “agents and agencies to be trusted members of their communities” with property transactions and blockchain offering the potential to “completely improve and grow trust in a real way”.

To learn more about how blockchain can function in the real estate industry, the video below is a useful starting point:

Sustainability and Training Also to the Fore

This is only the latest chapter of real estate’s exploration of blockchain in the industry. In September 2021 Jones Lang LaSalle Incorporated (JLL), a multinational commercial real estate company, made a deal with blockchain platform VeChain to promote more sustainable practices in the sector.

More recently, REIA Western Australia introduced ‘mandatory blockchain training’ for its real estate agencies. The May 2022 initiative sought to aid the industry’s adoption and evolution as crypto and blockchain progressed into the mainstream.

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Australia Banking Ethereum Stablecoins

ANZ Bank Uses Its Stablecoin A$DC to Buy Tokenised Carbon Credits

The stablecoin created by the Australia and New Zealand Banking Group (ANZ), A$DC, has been used by one of its large institutional customers to purchase a tokenised representation of Australian carbon credits, marking a significant milestone for the usage of stablecoins in the Australian economy.

In March, ANZ became the first bank to mint an Australian dollar stablecoin when it created 30 million A$DC, which were used by investment company Victor Smorgon Group (VSG) to significantly speed up and avoid conversion fees on its purchase of crypto assets.

Zerocap Acts as Market Maker

In this latest transaction, ANZ provided the A$DC stablecoin to longtime institutional customer VSG to facilitate the purchase of tokenised carbon credits known as BCAUs from the blockchain-based carbon trading platform BetaCarbon.

Digital asset manager Zerocap was also involved in the transaction, acting as a market maker and providing liquidity to convert VSG’s A$DC, which BetaCarbon doesn’t recognise, into USD Coin (USDC) so it could be accepted by BetaCarbon. Unlike VSG’s previous stablecoin transaction with ANZ, the value of this transaction has not been disclosed.

Using this payment method meant the transaction could be completed entirely on the Ethereum blockchain, removing the need to use any external payment platform such as the Visa network or the new payments platform (NPP), which would have introduced complexity, additional fees and settlement delays.

ANZ Anticipates Big Things for A$DC

ANZ’s A$DC is fully collateralised by Australian dollars and is redeemable at parity with funds held by ANZ in its managed reserve account. 

Unlike algorithmic stablecoins such as Terra-based UST and Tron-based USDD, which have faced huge issues maintaining their pegs to the US dollar, A$DC has no pegging mechanism and there is no risk that it could become de-pegged from the Australian dollar. 

According to Nigel Dobson, ANZ’s head of banking services, the bank’s stablecoin can be thought of more as a “tokenised deposit” than a typical crypto stablecoin.

Speaking to the Australian Financial Review, Dobson said ANZ saw potential for stablecoins like A$DC to help banks and other financial institutions transition to a more efficient blockchain-based infrastructure:

We see this is evolving from being internet-protocol based to one of ‘tokenised’ protocols. We think the underlying infrastructure – efficient, secure, public blockchains – will facilitate transactions, both ones we understand today and new ones that will be more efficient.

Nigel Dobson, head of banking services, ANZ

Ethereum Blockchain of Choice for Now

Dobson added that the Ethereum blockchain was favoured at the moment because it had established a set of de facto standards, including ERC-20 smart contracts. However, he anticipates a possible shift away from Ethereum to other, faster and more sustainable networks, such as Solana or Polygon, as these networks implemented similar standards and matured:

Standards are absolutely fundamental to interoperability, and they will soon allow organisations to transfer assets off expensive, and arguably unsustainable, blockchains to ones with lower cost, faster throughput and sustainability credentials.

Nigel Dobson, head of banking services, ANZ

To date, A$DC has only been used for real-world transactions by VSG, but that’s likely to change soon. Earlier this month, ANZ revealed it was planning to extend access to its stablecoin to a wider range of institutional customers and, in the long term, possibly to retail investors.

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Australia Crypto Exchange Crypto News Payments

Aussie Exchange ‘Banxa’ Cuts 30% of Staff, Citing ‘Crypto Winter’

Australian crypto payments operator Banxa will lay off more than 30 percent of its global staff to reduce operating costs amid the ongoing bear market.

“Like many others in our industry [we] are anticipating another crypto winter, with trading volumes declining significantly,” said Banxa CEO Holger Arians in a grim letter to staff.

“We saw our market capitalisation nearly halve in a matter of days, and the forecast is that these conditions will most likely continue for another 12 months.”

Banxa must take decisive actions to reduce costs now, or else our company won’t be able to succeed over the long run.

Holger Arians, CEO, Banxa

With staff across seven different countries, including Australia, APAC, the US, UK and Canada, Banxa will reportedly cut employee numbers from 230 employees to 160.

European MD Also Out the Door

Banxa is an international Web3 on-and-off ramp solution that facilitates conversions between digital assets (including cryptocurrencies and NFTs) and fiat currencies. The company’s European managing director, Jan Lorenc, is also likely to step down, indicating Banxa’s diminishing interest in the Euro market.

The company has traded on the Toronto Stock Exchange’s early-stage TSX Venture Exchange since January 2021, but its shares have plunged 74 per cent in the past 12 months as the crypto and broader tech markets continue to cop a hammering.

Banxa will centralise its operations in the Australian and Philippines markets in order to better prioritise higher margins and profitability in the face of current industry headwinds, according to a spokesperson.

Jobless Crypto Queue Lengthens

Other major cryptocurrency platforms have also slashed their head counts. In mid-June, lending platform BlockFi and major exchange Crypto.com announced they would cut more than 400 jobs between them. Just a day later, Coinbase revealed it would be liquidating 1,100 jobs, or around 18 percent of its total workforce. With Gemini and Robinhood also recently rationalising their staff numbers, it would seem that the crypto winter is already upon us.

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Australia Crypto News Cryptocurrencies Cryptocurrency Law Regulation

Crypto Ads Crackdown Expected Soon to Protect Australian Consumers

Caroline Malcolm, the Australian-born head of international policy at crypto security firm Chainalysis, believes the federal government will soon introduce regulatory reforms to offer everyday Australians a higher level of consumer protection.

Regulations Likely Within Next Year

The former head of the OECD’s global blockchain policy centre told attendees at the Chainalysis LINKS conference in Sydney that she believes regulations will be implemented in the next six to 12 months.

Specifically, the focus is likely to relate to advertising standards and prohibited practices, and bringing those in alignment with traditional investment regulations:

Thinking about some of those traditional concepts around market manipulation, for example, and bringing those into crypto space and starting to have some obligations there in terms of whether it be wash trading, front-running, or insider trading.

Caroline Malcolm, head of international public policy and research, Chainalysis. Source: Australian Financial Review

Malcolm noted that the new regulations would require clarity, particularly in the areas of advertising and promotion:

It’s not about banning advertising or banning the sale of particular assets to particular parts of the community. But [it is] really about making sure that there’s no misleading advertising, that there are disclosures about what you’re actually buying when you’re getting into this sector, and making sure that those risks are as clear to you as the opportunities are.

Caroline Malcolm, head of international public policy and research, Chainalysis. Source: Australian Financial Review

‘Australia Can’t Tackle This Alone’

Malcolm suggested that Australia is likely to take a similar approach to the UK, which has brought crypto assets into a similar regime as for other financial products.

Speaking in relation to Australian regulators and the local industry, she added that both have “misconceptions” about risk levels in crypto, and “both need to work together to understand each other’s obligations”. Malcolm argued further that Australian regulators ought to be working with global counterparts to ensure one country’s approach is as consistent as possible with others’.

Australia can’t tackle these issues by itself. We really need to work together to almost have a sandbox for trialling new approaches which cannot just put us in the same position in terms of policy outcomes, but perhaps even put us in a better position to allow us to be more effective in some of these policy objectives that we have.

Caroline Malcolm, head of international public policy and research, Chainalysis. Source: Innovation Australia

While Australians made US$2.1 billion in crypto gains during 2021, it isn’t clear how they have fared thus far in 2022, particularly after the most recent downturn. Arguably, this may be the appropriate time to introduce sensible consumer regulations in alignment with other financial products.

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Australia Bitcoin Crypto News

Australia Confirms Crypto is Not a Foreign Currency

Even though El Salvador and the Central African Republic have made bitcoin legal tender, newly-elected Australian Treasurer Jim Chalmers has said that crypto will continue to be excluded from foreign currency tax arrangements under the Albanese Labor Government.

In a prepared statement, Chalmers noted that the decision by the Government of El Salvador to allow bitcoin as legal tender “has the potential to create uncertainty about the status of crypto assets such as Bitcoin for tax purposes in Australia”.

Crypto Remains Subject to Capital Gains Tax

Therefore, in an effort to ensure absolute clarity in the current legislative arrangements, Chalmers added:

Crypto assets will not be regarded as a foreign currency for tax purposes. Capital gains tax will continue to apply to crypto assets that are held as investments.

Jim Chalmers, Australian Treasurer

Finally, he clarified that this latest proclamation was backdated to July 1, 2021, and that the government would “continue to take a pragmatic and timely approach to its role in the rapidly-evolving digital currency landscape”.

Pragmatism Needed in Australia

No further details were offered as to what was meant in that regard, however, pragmatism presumably would entail a reconsideration of the position should further evidence come to light.

As an example of pragmatism at work, consider the US Lummis Gillibrand crypto bill currently under consideration, which proposes that crypto transactions less than US$200 do not create a taxable event.

Crypto Implosion Juices Senators Lummis, Gillibrand to Push for Law to Clamp Dow - Bloomberg
Senators Kirsten Gillibrand (left) and Cynthia Lummis advanced the US Crypto Bill. Source: Bloomberg

Even though Australia’s Bitcoin Industry Body specifically campaigns for bitcoin to be treated as a foreign currency, this latest government announcement has put a stop on that, at least for the time being.

While cryptocurrencies remain highly volatile with potential for exponential gains, it’s unlikely that the Australian government will forego the opportunity to extract revenue in the form of capital gains.

On the bright side, shrewd investors are likely to use this latest downturn as an opportunity to harvest losses to maximise tax efficiency.

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Australia DeFi Synthetix

ETH Layer 2 Synthetix Surges 100% Amid Curve Finance Collaboration

Australian Ethereum layer-2 scaling solution Synthetix has seen its native token SNX balloon 100 percent after linking up with liquidity provider Curve Finance.

The partnership has led to the creation of Synthetic Ether, Bitcoin and USD, providing investors with cheap conversions:

Synthetix Now Ranked #3

The knock-on effect since June 20 has pushed the scaling solution to the position of third-largest protocol. As Synthetix was one of the first protocols launched on Ethereum, investors are pleased to see this positive movement:

The collaboration with Curve Finance has resulted in curve pools for Synthetic Ether (sETH)/Ether (ETH), Synthetic US dollar (sUSD)/3CRV, and Synthetic Bitcoin (sBTC)/Bitcoin (BTC). This tech allows the platform to offer more derivatives tokens.

While these synthetic assets are Synthetix’s main product, it appears that new fundamentals have strengthened the project and played a significant role in the surge of SNX.

Kain Warwick, founder of Synthetix, believes the company’s recent success is down to its willingness to experiment with novel mechanisms to provide stability, and the community’s responsiveness under difficult circumstances.

Australian Web3 Witnesses Rapid Development

In February last year, Synthetix successfully raised A$12 million with the aid of a handful of venture capital (VC) firms. The funds weren’t sent directly to Synthetix, rather they were raised through the purchase of Synthetix’s native token, SNX. The fundraising supported the notion that a place was developing for VC money within DeFi.

Thanks to the emergence of DeFi, DAOs and NFTs, the Aussie Web3 scene has seen rapid development over the past few years, due in no small part to Synthetix, DAO Under, Immutable, Maple Finance and Sigma Prime, who have all helped foster interest from investors.