The Morrison government says it will end the “brain drain” of homegrown cryptocurrency innovators fleeing overseas if re-elected early next year, as professional services giant EY suggests the hot sector could grow 30 times over the next decade with the right rules and regulations in place.
Modelling conducted by EY, commissioned by Nasdaq-listed bitcoin miner and asset manager Mawson Infrastructure Group, has projected the size of cryptocurrency-related economic activity to grow from $2.1 billion this year to $68.4 billion by 2030.
Its workforce could grow from an estimated 11,600 workers today to 205,700 over the decade, with the creation of new, highly specialised jobs in software development, decentralised finance (DeFi) and advisory functions, such as legal and marketing.
The bullish estimate came with the caveat that Australia would need “attractive, internationally competitive tax and regulatory settings” and “successful uptake of digital assets … technology at scale” to realise the multibillion-dollar opportunity.
Even under a “central growth path” that lacked some of those tailwinds, the crypto sector could still be worth $44.7 billion and employ 134,500 people by 2030, the EY modelling showed.
Senator Andrew Bragg – who launched the EY report at the Barangaroo offices of law firm Gilbert + Tobin on Tuesday – said the projections backed the government’s goal to make Australia a welcome destination for cryptocurrency and blockchain businesses.
Election risk
Mr Bragg chaired the parliamentary inquiry recommending a new framework for cryptocurrency regulation, which was mostly accepted by Treasurer Josh Frydenberg last week.
“If you want to pursue a reform agenda, it’s very important that there is the evidence to support your position,” Mr Bragg said. “Many people said I was wasting my time, but now this plan is the national policy of Australia.”
The NSW senator dismissed the criticism of venture capitalist Mark Carnegie, who The Australian Financial Review revealed had relocated his digital asset funds business to Singapore, shunning Australia for a more “pro-crypto” market.
“We will be in the top five jurisdiction – and Australia is not usually in the top five jurisdictions in many things,” Mr Bragg said. “We’re ahead of the US – they’re still conducting congressional inquiries, we’ve done that. It’s been adopted by the executive government.”
He said he wanted to fast-track the government’s already-ambitious 12-month timeline for implementation of the crypto plan – which will create a licensing regime for digital exchanges and complaint rights for de-banked crypto firms, among other items – but that the election early next year presented an obvious “risk”.
“If people vote for the Coalition they will get a world-leading crypto plan,” Mr Bragg told the Financial Review. “If they vote for Labor or the independent voices, who knows what they’ll get – probably nothing.”
While the EY modelling projected a 17 times growth rate in crypto-linked employment opportunities, it did not factor in jobs made redundant by disruptive blockchain-enabled technologies, such as financial intermediaries replaced by DeFi apps or corporate lawyers deemed unnecessary in a world of smart contracts.
Asked to comment on the net impact of crypto growth on the economy, Mr Bragg said: “I’ve never bought the argument that technology is a jobs destroyer. The technology is sound and it will create more jobs than it will kill.”
Decarbonisation aid
The EY modelling also did not consider potential “price changes”, meaning the assumption is that business and individual investment in digital assets will continue to snowball, unlike the so-called wilderness years of 2018-19.
But James Manning, chief executive of Mawson Infrastructure, pointed to research, republished by EY, suggesting almost one third (28.8 per cent) of Australians are invested in, or plan to invest in, crypto assets.
“Australians should be viewing this as a huge opportunity for the economy,” Mr Manning said. “These are real jobs and this [set of policies] would end the brain drain.”
Mr Manning, who will open a renewable energy-powered bitcoin mine in Byron Bay, said the sector could be a boon to efforts to decarbonise the economy, despite its reputation as a big emitter.
The EY report found that, “unlike commodity mining, crypto-mining may be easily switched on and off in response to fluctuating electricity demand, supply and prices”. That means miners can use excess electricity during off-peak periods and help reduce price volatility.
But the Bragg report’s recommendation that crypto miners receive a company tax discount of 10 per cent should they source power from renewable sources was rejected by the government.
“You can’t get everything in life,” Mr. Bragg said. “I’ve always recognised I was a bit of a loner on the tax deals idea.”
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