Tokenisation could inject $24bn annually: Project Acacia

Project Acacia, the brainchild of the Reserve Bank of Australia (RBA) and Digital Finance Cooperative Research Centre (DFCRC) to explore a tokenised wholesale asset ecosystem in Australia, has completed its experimental and research phase, which has the potential to deliver $24 billion in annual economic gains while fostering stronger public-private collaborations, the entities said.

The project included the development of 20 wholesale tokenised market use cases across multiple asset classes, including fixed income, managed funds, repos, structured products, private markets, and more. This includes the pilot of the central bank digital currency (CBDC), which was a three-year program flagged by the RBA and Treasury in September 2024.

The final report indicates a "strong interest" for the tokenisation of assets to improve efficiency, resiliency and functionality of financial markets.

"Project Acacia revealed considerable industry interest in tokenisation and demonstrated the potential for tokenisation to materially improve the efficiency and functioning of Australia's wholesale asset markets, both directly and indirectly," the report said.

"This partly reflects the relatively lower level of dynamism in Australia's wholesale financial markets compared with other areas of the financial system, such as retail payments."

The use cases highlighted opportunities across an asset lifecycle, including improved capital efficiency, shorter settlement cycles, reduced counterparty risk, 24/7 liquidity access, and reductions in intermediation costs and operational errors.

However, they also presented where the ecosystem can improve outside of tokenisation, such as more expansive use of existing fast payment rails, better alignment of operating hours with global markets, and greater transparency in key funding areas.

Commenting, RBA assistant governor Brad Jones said the initial phase was a success for Project Acacia.

"[The research phase] surfaced a set of common opportunities and challenges in making our financial system more dynamic and resilient through a period of intense technological disruption," Jones said.

"The scope of future initiatives we are outlining today is ambitious - covering tokenised assets, money and new infrastructure arrangements - and recognises that it will take a collective effort to ensure Australia's financial system is well positioned for the digital age."

DFCRC co-chief executive Tālis Putniņš added: "Project Acacia demonstrated how tokenised assets, digital money and new settlement infrastructure can improve the efficiency and functioning of wholesale financial markets."

"This includes faster settlement, reduced counterparty risk, improved capital efficiency and automated asset servicing.

"Australia achieved important world firsts through Project Acacia, including the issuance of pilot wholesale CBDC onto both public and private distributed ledger infrastructure for research purposes, demonstrating Australia's capability to play a leading role in the next generation of financial market infrastructure."

The opportunity now is to build on the momentum from Project Acacia by translating successful experimentation into real-world adoption through continued collaboration between industry, regulators and government, Putniņš said.

The completion of the project phase was welcomed by the industry, however BTC Markets chief commercial officer Paul Stonham advised the scaling of the innovation will be the challenge moving forward.

"The report explicitly identifies 'challenges to scaling' and the need for deeper regulatory and industry coordination. That's an honest assessment, and an important one," he said.

"In my experience, this is exactly the pattern you see when financial market infrastructure matures. The capability gets proven. Then the hard work begins; getting regulators aligned, getting industry to agree on common frameworks, and making sure the underlying plumbing, in this case the RBA's own settlement infrastructure, is fit for purpose."

Stonham said the continued research and industry consultation will be key to the success in expanding the capability across the broader financial markets.

Meanwhile, chief executive of AUDD Effie Dimitropoulos, a stablecoin that was heavily involved in Project Acacia, said the final report reinforces the role of stablecoins play.

"As Project Acacia demonstrates, stablecoins are already being explored alongside central bank money and tokenised bank deposits as core settlement assets in wholesale and institutional markets," Dimitropoulos said.

"This reflects a broader shift, where digital money is increasingly being incorporated into traditional financial infrastructure to support faster, more automated and lower-risk transactions.

"The findings highlight the urgency of moving from experimentation to implementation... Federal Parliament and government bodies like the RBA must continue to provide the regulatory frameworks needed to support the ongoing growth of the stablecoin industry. As the industry evolves and expands, so too must these frameworks."

Simultaneously, Coinbase Australia has launched decentralised exchange trading (DEX), expanding tradable assets in-app to millions.

Coinbase managing director APAC John O'Loghlen said the launch of DEX trading in Australia is the latest step in Coinbase's global push to build an app to exchange everything.

"For a long time, Australians wanting to trade on decentralised protocols would need to do so outside the Coinbase app, requiring an additional layer of administration and knowledge. Launching DEX is another step in our goal of enabling Australians to trade anything from anywhere in the world, all with the familiarity and security of the Coinbase app," O'Loghlen said.

"Australian users are among the first to have access to Coinbase's DEX integration, alongside those in the US, UK, and Brazil. We're looking forward to continually updating our users on new and expanded services as regulatory clarity continues to mature globally."

To access DEX, users must create a self-custody DEX wallet prior to trading, Coinbase said.