Australia's financial regulatory agency has approved a pilot project for Digital Money, exploring the tokenization of the financial sector.

The Australian Securities and Investments Commission (ASIC) announced on Wednesday the approval of 14 participating institutions to conduct real currency trading pilot projects using central bank digital currency (CBDC) and stablecoins. This marks Australia’s largest attempt in the tokenization of finance, expected to bring an annual rise of up to $12.4 billion to the economy.

Project Overview: Attempts in the Tokenization of Financial Sector

The project is called “Project Acacia” and is jointly initiated by the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre (DFCRC). It aims to test how digital currency can support the trading of tokenized assets between institutions. Tokenized assets refer to the digital representation of real-world assets (such as bonds, real estate, or commodities) recorded through blockchain technology, enabling fractional ownership and faster settlement of traditional financial instruments.

Australia’s ambition

According to the latest research by DFCRC, the economic potential of this plan could reach $12.4 billion per year, covering multiple asset classes such as fixed income, private markets, accounts receivable, and carbon credits. Major financial institutions such as National Australia Bank, Commonwealth Bank of Australia, and Westpac will be involved, while fintech companies like Fireblocks and Zerocap will also participate in testing.

Regulatory easing, promoting technology testing

The regulatory exemptions provided by ASIC will assist these participants in conducting smoother tokenization asset trading tests in the coming months, eliminating conventional regulatory barriers. The tests are expected to be conducted on multiple distributed ledger platforms (such as Hedera, Redbelly Network, R3 Corda, etc.) and are planned to last for six months, with the results to be released in the first quarter of 2026.

About the Controversy of Permissioned Blockchains

However, Kadan Stadelmann, the Chief Technology Officer of the Komodo platform, questioned the project. He believes that permissioned blockchain projects like Project Acacia lack real innovation compared to decentralized open-source blockchains such as Bitcoin and Ethereum, and may exacerbate centralized control over the financial system.

Risks of the Two-Tier Blockchain System

Stadelmann pointed out that if the project is successful, it could lead Australia to “fall behind” and that the country would be in a technological “dark age” compared to those adopting open blockchain solutions. He warned that this “further entrenchment of the traditional financial system” could limit the transparency, censorship resistance, and spirit of innovation brought by blockchain technology.

Looking to the Future

Despite the criticism, the advancement of Project Acacia still reflects Australia’s ambition in the digital asset space. If successful, this pilot project could lead Australia to take the lead in the regulation and application of blockchain and digital assets, but its long-term impact remains uncertain.