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A new analysis conducted by Ernest and Young and commissioned by the Mawson group shows Australia is set to benefit massively from growth in the crypto sector. The country is at the forefront of technology adoption. It has integrated blockchain and digital assets technology to generate value and reduce transaction costs. Currently, digital assets-related activities generate $2.1 billion and employ about 11 6000 workers. 

The report classifies digital assets to comprise crypto, stablecoins, Defi, NFTs, Web 3.0, and DAOs. Cryptocurrencies and other blockchain-based technologies provide faster and cheaper payments as well as new ways of owning and investing in digital assets.

About the Report 

Mawson infrastructure group engaged Ernst and Young firm to examine the impact of cryptocurrencies and digital assets. The report shows the current state of the crypto sector ecosystem and estimates the economic impacts of the future growth of the crypto sector. Generally, the report concludes that the growth of the crypto sector influences the development of the Australian economy.

According to Mawson CEO and founder James Manning, the analysis responds to a report by the Senate Committee, “Australia as a Financial and Technology Center Final Report.”

State of the Digital Assets Sector in Australia 

Economic activities are becoming globalized. Therefore growth in digital, finance, and technology access will boost the economy’s performance. For this reason, it is prudent to enhance and maximize innovations around the crypto space. Deployment of stronger cryptocurrencies and digital assets will boost productivity, improve the efficiency of the Australian economy and the growth of the Australian economy. 

Currently, there is no solid regulatory framework to enable the realization of this goal. However, there is a need for proper standards and regulations to manage services, provide certainty to investors, consumers, and other players in the crypto space. This will spur growth in the crypto space and, in turn, drive innovation and bring more benefits to the customers and businesses.

Australia has high potential as a hub for crypto growth. The government and private sector have exhibited willingness to roll our innovative crypto assets. With the right policy and regulatory interventions, the digital economy could employ 206 000 workers generating $68.4 billion, which translates to 2.6% of the national economy. Some areas where future growth is expected include:

• Custody
• Asset Management 
• Insurance for Cryptocurrency 
• Custody 
• Financial services

As per ATO estimates, over 600000 Australians have invested in digital assets. However, the independent reserve puts the penetration rate higher. It estimates that about 28.8% of Australians have invested or plan to invest in digital assets, a significant increase from 18.4% in 2020.

New Earning Opportunities 

Consensus Mechanisms

Consensus mechanisms are crypto mining methods that enable crypto to remain decentralized and without interference from network payments processors and banks. The main two consensus mechanisms are proof of stake and proof of work. Bitcoin mining uses proof of stake. About 0.19% of bitcoin mining occurs in Australia. Proof of stake also provides businesses and companies with an opportunity to earn crypto rewards. But it goes a step further to provide energy efficiency. 

Crypto mining will also contribute to the transition to renewable energy and electricity price volatility, as per the report. Currently, 75% of the energy used in crypto mining is renewable. The digital assets industry adds $2.1 billion to the economy. $1.52 billion is in direct economic impacts, while $0.54 is in indirect economic benefits. According to the report, digital assets contribute to a better economy by enhancing transparency, efficiency in business, and productivity. 

The technology provides strong strategic and economic value in the finance sector. According to EY analysis, cryptocurrency brings about $1 billion to the sector. The sector also contributes to national trade. It generates about $50 million in capital and exports every year. 

The Crypto industry in Australia is cross-cutting. It employs people in professional and financial services. It employs about 8000 directly and 3600 indirectly. The employees in the financial services industry are spread across various industries, including software development, legal, audit, and accounting. These roles are related to information security, data, artificial intelligence, and software engineering. Professionals are tasked with market analysis for trading opportunities, product development, and building, maintaining, and improvising applications for crypto transactions. The professional roles overlap in marketing, insurance, banking, and other sectors.

Future of Digital Assets in the Australian economy

The growth of the Australian digital assets ecosystem is dependent upon two factors.

• Policy Environment - Tax and regulatory setting that is attractive and competitive can will boost growth in the sector

• Digital assets rollout - the adoption of digital assets will also depend on the integration with various technologies and other digital assets.

Due to the highly speculative nature of digital assets, EY has rolled out two growth models for the sector.

• Central Scenario - the likely growth trajectory under the current settings
• High growth scenario - Growth potential under accelerated growth pathway, where the policy setting support flourishing of the sector

The digital assets ecosystem is expected to grow and become embedded in the economy, leading to more economic growth and increased productivity in the workplace. 

The scale of the economic benefits will depend on the speed of adoption and transformational capacity of the technology in other industries. It is expected that the digital asset and cryptocurrency industry could be worth a $250 billion contribution of about 2.76% to the national economy by 2030.  It is expected to be bigger than the energy, tourism, and agriculture industries. 

The activities of the digital assets are expected to grow exponentially, hitting 50% each year, and eventually generate high-value exports worth $2.8 billion by 2020. In addition, the economic output from blockchain and digital assets is expected to hit $156 billion under the central path (current settings). The sector could get an additional $93 billion under a high growth path. 

Job Creation 

The number of people working in the digital asset industry in Australia is expected to hit 134500 by 2030. With the right policies and regulatory policies, the number of high-impact jobs available for Australians working in the cryptocurrency sector will rise to 205700. As mentioned, these jobs will span treasury dealers, transaction auditors, crypto asset managers, Lawyers, software developers and engineers, security architects, data scientists, accounting, and auditing. 

Like most growing technologies, Australia lacks a fit-for-purpose regulatory system. Therefore there is genuine concern about consumer protection, law enforcement, and market integrity. A regulatory framework in the tax and human capital is required to support innovation and investment in digital assets. As per the report, proper regulation and standards will boost the sector, enabling consumers to flourish and businesses to reap maximum benefits.