Australia Banks Join Digital Currency Trial for Tokenized Assets

Australia’s central bank said on Thursday it’s moving to its next stage in exploring digital currencies, launching a trial on how digital money and tokenization can support wholesale financial markets. 

The Reserve Bank of Australia (RBA) said in a statement on Thursday that stablecoins, bank deposit tokens and a pilot wholesale central bank digital currency (CBDC) will be used by partners participating in the trial.

The trial is phase two of Project Acacia, a joint initiative from the RBA and the Digital Finance Cooperative Research Centre announced in November last year.

A diverse range of organizations, from local fintech firms to major banks, have been selected to test 24 use cases, 19 of which will involve real money and five proofs-of-concept involving simulated transactions.

These tests would involve a range of asset classes, including fixed income, private markets, trade receivables, carbon credits and examining new ways of using bank accounts at the RBA.

This phase is expected to take six months, with results published in the first quarter of 2026.

Major banks onboard for crypto test

Three of the four major Australian banks are part of the pilot: the Commonwealth Bank (CBA), the Australia and New Zealand Banking Group (ANZ) and Westpac Banking Corporation.

CBA said it will work with JPMorgan to evaluate how digital currencies and collateral records could deliver greater efficiency and liquidity with lower risk in the repo market.

“The repo market, with its critical role in liquidity management and monetary policy implementation, represents an ideal starting point for this exploration,” Sophie Gilder, CBA’s managing director of blockchain and digital assets, said in a statement. 

The repo market involves short-term borrowing and lending of funds, secured by government securities, where one party sells a security to another party and agrees to repurchase it later for a higher price.

ANZ is leading the testing of a use case for tokenized trade payables, which aims to address the challenges of working capital and cash flow faced by suppliers, the bank said in a statement.

It will also conduct a tokenized fixed-income use case exploring a wholesale CBDC as a tokenized money to facilitate risk-free credit and liquidity settlement.

Green light from regulators

Australia’s markets regulator, the Australian Securities and Investments Commission, has given participants a reprieve from some regulations so they can trial assets that currently sit outside the law, according to the RBA.

ASIC Commissioner Kate O’Rourke said in a statement that the agency “sees useful applications for the technologies underlying digital assets in wholesale markets.”

“The relief from regulatory requirements that we have announced today will allow these technologies to be sensibly tested—to explore opportunities and identify and tackle risks.”

The current state of crypto regulation in Australia

Under its ruling center-left Labor Party, Australia’s government proposed a new crypto framework regulating exchanges under existing financial services laws back in March.

Related: Crypto ATM sting uncovers elderly widow who lost $282K in scam

The government has also promised to work with Australia’s four largest banks to better understand the extent and nature of de-banking.

In August 2022, the government initiated a series of industry consultations to draft a crypto regulatory framework.

Magazine: Wealthy, isolated, and incredible beaches: Perth Crypto City Guide