If you own Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares, you own part of the first Australian bank to launch – and transact with – its own cryptocurrency.
The stablecoin created by ANZ is called A$DC and is pegged to the Aussie dollar. That means it won't be subject to the wild volatility experienced by most cryptos, including Bitcoin (CRYPTO: BTC), the world's first.
Image source: Getty Images
What are stablecoins?
Not all ANZ shareholders will be familiar with stablecoins.
In a nutshell, they're a type of crypto that, if they behave as intended, closely mirror the value of a fiat currency they're linked with. Or potentially a basket of fiat currencies.
Stablecoins are valued not for their potential to make crypto investors outsized gains, but rather for their stability. Crypto investors might use them to invest in Bitcoin, Ethereum (CRYPTO: ETH), or any of the wide range of altcoins in virtual circulation, as well as non-fungible tokens (NFTs).
Stablecoins, as we'll see with ANZ's maiden transaction below, can also be used to send large amounts of money internationally quickly, and at very low costs.
The third biggest crypto by market cap is in fact a stablecoin. Tether (CRYPTO: USDT) is closely aligned to the US dollar and has a total market valuation of US$80.9 billion.
There's also rival stablecoin USD Coin (CRYPTO: USD), which ranks as the fifth-largest crypto in virtual existence with a market valuation of US$52.6 billion.
Own ANZ shares? Here's why the bank launched its own crypto
Commenting on ANZ's decision to launch its own crypto, Nigel Dobson, banking services portfolio lead at ANZ, said (quoted by The Australian Financial Review): "We anticipate the digital asset economy will accelerate and a foundational element will be a digital Aussie dollar."
According to Dobson:
Our customers want to buy digital assets and seeing a digital Australian dollar minted by a large ADI like ANZ will make them confident they can transact with us, and use the coin domestically. This means they don't have to flip in and out of US dollar coins, taking exchange risk in an elongated process.
As the AFR reported, ANZ's maiden crypto transaction with A$DC enabled investment company Victor Smorgon Group to send $30 million to Zerocap, a crypto asset platform.
The advantage of using ANZ's new crypto?
The transaction that would have taken a number of days using traditional financial systems was completed in 10 minutes.
It also saved currency conversion costs, negating the need to convert Aussie dollars into greenbacks, as Zerocap makes use of USD Coin to transact in cryptos like Bitcoin and Ethereum.
And if that's not enough for you, A$DC is also programmable.
Dobson explained:
We see our digital coin will be programmable for our customers' needs. Where our coin needs to speak to, or understand, communications from other smart contracts, we have an ability to design that code, to communicate with a tokenised physical asset.
While ANZ's institutional customers will be the first to have access to A$DC, the bank said the token will eventually be listed on a crypto exchange for wider use.
What the experts are saying on the ANZ crypto launch
Global exchange Kraken's managing director for Australia, Jonathon Miller, said: "It's commendable, and rational, for ANZ to use the most utilised public blockchain, Ethereum."
Miller continued:
It proves that these open source protocols are alternate financial services networks which offer many advantages over traditional closed source rails. In particular transparency, composability/programmability and ultimately greater utility for individuals and businesses.
Miller said the Reserve Bank of Australia would do well "to replicate similar openness" in its proposal for a retail central bank digital currency (CDBC).
Ian Lowe, CEO of crypto wealth management platform Dacxi, said: "It was only a matter of time before we saw banks in Australia follow other Western markets with this kind of stablecoin offering, and we definitely welcome the move as it will continue to drive mainstream adoption of cryptocurrency."
Lowe added:
We believe that continued adoption of blockchain technology by mainstream institutions indicates that tokenisation, where assets such as gold and silver are made available as digital investments on a blockchain, is also headed for more widespread adoption, vindicating our ongoing investment in the space.
Daniel Sekers, managing director of crypto trading platform YourPortfolio, was also enthusiastic about ANZ's crypto launch.
"It's fantastic to see a big four ADI adopting web3.0 technology. There is no doubt that stablecoins are going to play a big part in our future and we will likely see multiple AUD-backed stablecoins as the future of our nation's currency," he said.
Sekers continued:
I have no doubt that off the back of ANZ's announcement we will likely see a flurry of new stablecoins announced. This will be the beginning of multiple transactional on-and-off ramps that will change the payments space for the better.
The key questions consumers should be asking themselves before they dive into any stablecoin is who is behind it? Is it truly asset backed? And what is its utility to me as a consumer?
How have ANZ shares been tracking?
ANZ shares are down 0.6% today, as the S&P/ASX 200 Index (ASX: XJO) struggles back to a 0.1% gain itself.
So far in 2022, the ANZ share price is down 1.0%, compared to a loss of 2.7% posted by the ASX 200.
