Forget Terra. ANZ moves ahead with Aussie dollar pegged stablecoin

Unlike the algorithmic Terra stablecoin, A$DC is fully backed by Aussie dollars.

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Key points

  • ANZ is moving forward with its Aussie dollar pegged stablecoin, A$DC 
  • A$DC enables users to buy and sell cryptos or NFTs without having to convert into and out of US dollars 
  • Tokenised assets have the potential to deliver greater efficiency, speed, transparency and value 

Australia and New Zealand Banking Group Ltd (ASX: ANZ) isn’t about to let the ructions surrounding last month’s collapse of Terra’s US dollar pegged stablecoin, TerraUSD (CRYPTO: UST), and its supporting token, Terra (CRYPTO: LUNA), derail its own stablecoin project.

Word of ANZ’s stablecoin, called A$DC, first broke back in March, as the Motley Fool reported here.

A$DC is pegged to the Aussie dollar. And unlike Terra’s algorithmic stablecoin offering, which relied heavily on users’ confidence to maintain its peg, ANZ’s token is fully backed by Australian dollars.

Now you and I won’t be able to transact with A$DC just yet. It’s still undergoing a number of reviews by various financial regulators. But the bank intends to expand the stablecoin to more of its corporate customers in the months ahead.

ANZ stablecoin will ‘absolutely’ be extended

Addressing the outlook for A$DC at The Australian Financial Review Banking Summit last week, ANZ banking services lead Nigel Dobson said:

When you think about stablecoins that are, issued by a commercial bank in Australia, it really is just a different form factor of money. Are we going to extend it? Yes, absolutely we will. And this will be based on our institutional customers demand, as they reveal, increasingly, their own tokenisation strategies.

The idea is to enable people to buy a range of digital assets with Aussie dollars using A$DC, without having to convert back and forth from US dollars.

Following an expanded offering to its corporate clients, ANZ hopes to offer its stablecoin to retail customers to buy things like non-fungible tokens (NFTs).

“We think that the growth area is not going to be so much in crypto, but in NFTs,” Dobson said. “NFTs are already in the market around sports memorabilia and [can extend to] anything digitally created.”

The bank is also eyeing the potential use of A$DC to streamline the settlement process in the growing carbon trading market.

According to Dobson:

We think that’s going to have exponential growth over the next ten years, and the elements of tokenisation that can be applied to that marketplace to make it much more efficient, more global, and frankly, more available to a wider range of consumers but certainly to institutional investors.

We believe stablecoins form a very important element of the settlement value and the settlement process when it comes to tokenised carbon credit.

Overall, Dobson added, “We believe that tokenised assets can be inexorably developed, to deliver greater efficiency, speed, transparency and value for customers over time.”

First, though, there’s a fair bit of red tape to be sorted through yet.

Bridging the regulatory hurdles

Speaking at the AFR summit, Australian Prudential Regulation Authority (APRA) chairman Wayne Byres said stablecoin regulation was being addressed via amendments to “stored value facilities” or SVFs.

“Subject to the development of the broader legislative and regulatory framework – which will depend on the priorities of the new government – we would hope to consult on prudential requirements for large SVFs in 2023,” he said.

Dobson welcomed the engagement with APRA and other regulators working on incorporating ANZ’s stablecoin into mainstream use:

It is nice to see APRA, ASIC and AUSTRAC all on the same virtual call together. We’ve got this kind of coalition of the curious going on at the moment, which I think is wonderful. And you know, the integrated interactions have been incredibly constructive.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Terra. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

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