Lead

The Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) today released the findings of Project Acacia, a joint research initiative that examined how innovations in digital money and settlement infrastructure could support the development of wholesale tokenised asset markets in Australia. The report, which details the potential benefits and challenges of tokenised securities, is intended to inform policy makers, industry participants and the broader financial community about the feasibility of a tokenised market framework.

Background

Tokenised assets refer to digital representations of real‑world securities that are issued, traded and settled on distributed ledger technology (DLT) platforms. In recent years, several jurisdictions have explored tokenised markets as a way to increase efficiency, reduce settlement risk and broaden access to capital. Australia’s wholesale market, which includes large institutional investors and market makers, has traditionally relied on centralised clearing and settlement systems. The RBA, as Australia’s monetary authority, has a mandate to maintain financial stability and promote the development of innovative financial infrastructure. The DFCRC, a research centre funded by the Australian government, focuses on advancing digital finance solutions. Together, the RBA and DFCRC have undertaken Project Acacia to assess the technical, regulatory and market implications of introducing tokenised asset markets at the wholesale level.

What Happened

The Project Acacia report was released on 12 May 2024 and is the culmination of a series of workshops, stakeholder consultations and technical studies conducted over the past two years. The key findings of the report are:

  • Digital money and settlement infrastructure can reduce settlement times from days to minutes, improving liquidity and reducing counterparty risk.
  • A tokenised wholesale market could enable more granular ownership structures, allowing investors to hold fractional shares of high‑value assets.
  • Technical challenges remain, including interoperability between existing clearing houses and new DLT platforms, as well as ensuring robust identity verification and anti‑money‑laundering controls.
  • Regulatory adjustments would be required to align tokenised securities with existing securities law, particularly around disclosure, custody and market surveillance.
  • Industry participants expressed cautious optimism, noting that a pilot programme could serve as a stepping stone to broader adoption.

The report also outlines a phased approach to implementation, starting with a limited pilot involving a small number of asset classes and participants, followed by a gradual expansion as technical and regulatory gaps are addressed.

Market & Industry Implications

According to the report, the introduction of tokenised wholesale markets could bring several benefits to Australian capital markets:

  • Increased Efficiency – Faster settlement times would reduce the need for collateral and lower the cost of capital for issuers.
  • Enhanced Transparency – Immutable ledger records could improve auditability and reduce the risk of fraud.
  • Broader Access – Fractional ownership could attract a wider range of investors and increase market depth.

However, the report also highlights potential risks that could offset these gains:

  • Operational Risk – Integration of DLT with legacy systems may create new points of failure.
  • Regulatory Risk – Inadequate legal frameworks could lead to uncertainty for issuers and investors.
  • Market Risk – Rapid adoption without sufficient market infrastructure could lead to volatility.

Industry stakeholders, including major banks and securities firms, have responded by calling for a clear regulatory roadmap and the establishment of a dedicated task force to oversee the pilot programme. The RBA has indicated that it will work closely with the Australian Securities and Investments Commission (ASIC) to ensure that any new tokenised market complies with existing securities regulations.

What to Watch

Key upcoming events that could shape the trajectory of tokenised wholesale markets in Australia include:

  • RBA and ASIC Joint Working Group Meetings – Scheduled quarterly meetings to discuss regulatory frameworks and technical standards.
  • Pilot Programme Launch – The RBA has announced a target date of 30 September 2024 for the launch of a pilot tokenised market involving a limited set of asset classes.
  • Industry Conferences – The Australian Securities Exchange (ASX) will host a conference in November 2024 to discuss the implications of tokenised securities for market infrastructure.
  • Annual RBA Monetary Policy Report – The next report, due in February 2025, will include a section on the progress of Project Acacia and any macroeconomic implications.