Matthew Hale
Matthew Hale

Matthew Hale


Submission to Senate Select Committee on Fintech and Regtech - Part 6

Part Six: Conclusion

Block8 recently provided a submission to the Australian Senate’s Select Committee on Financial Technology and Regulatory Technology. We focused our discussion on the use of distributed ledger technology (DLT) and its relevance to the Committee’s two public consultation papers that were released during 2020, as well as the Committee’s terms of reference in general.

The perspective we provided was one not just as technologists, or as blockchain specialists, but as a holistic product development company. Block8 not only provides professional services, but also co-ventures with subject matter experts to design, build and commercialise full-stack and production-grade software solutions. We understand the importance of discussing these topics with a practical lens. In isolation, DLT presents several novel characteristics when designing a new software application, but we must look to integrate a number of related technologies and considerations in order to realise its full potential. This includes things like scalability techniques, rules as code, privacy-preserving technologies such as zero-knowledge proofs and secure hardware, and digital identity.

This blog series mirrors our submission to the Committee, covering the following points of discussion:

  • [1] Introduction, providing the context and motivation for our submission from our CTO;
  • [2] Challenges, discussing blockchain awareness and innovation culture;
  • [3] Opportunities, discussing the scope of FinTech and RegTech opportunity for Australia;
  • [4] Regulation, with a focus on the Consumer Data Right;
  • [5] Technology, covering the characteristics of blockchain and misconceptions; and,
  • [6] Conclusions, which summarises our present challenges and imperatives.

If you’re in any way curious about the future of digital technology, particularly as it applies to Fintech, Regtech, or the future of the Australian digital economy, we hope you will find some value from this series.

As before, new blogs will be published each week, but if you want to read the full submission early, you can do so below.


Summary of  Themes

Our Submission left specific Government recommendations in the capable hands of the Committee and Chair, however, we summarise three key themes for consideration in this whitepaper:

  • Far greater awareness of distributed ledger technology is needed across the economy.
  • Support from the Government must be resounding and unquestionable.
  • We must recognise and ameliorate the unintentional, yet systemic barriers in regulatory language.


  • Blockchain is a relatively new and unfamiliar information management paradigm. It should not be considered as any specific technology. It suffers from a deep lack of awareness of its potential. Residual misconceptions routinely result in missed opportunities.
  • There are likely to be numerous blockers in regulatory language for deploying distributed FinTech and RegTech solutions. For example, the Privacy Act requires that data be deleted from a dataset once its purpose has been served, but there is actually no provable way to achieve this. While there are excellent privacy preserving techniques that are available to us using cryptography and secure hardware, the only way to “require that data be deleted” is to throw the disk on which it has been saved into a very hot fire.
  • Across Government, DLT should be elevated as a strategic priority, requiring mandatory consideration for any new IT strategy, similar to sustainability or equal opportunity objectives. Adoption targets for aligning stakeholders across Government could also be considered, for example: 5% by 2025, 30% by 2030. 
  • New technology is disconnected from old business, and the vast majority of blockchain innovation is occurring outside of large enterprises. In order to meaningfully accelerate institutional transformation, we must find ways of supporting our technology experts to meaningfully connect with individuals within big business.
  • Centralised information systems work very well when they operate in isolation, but when there is a requirement to share information of value across multiple actors in a network, their deficiencies are revealed to us when we contrast their function with a distributed ledger alternative.


  • Any political imperative for blockchain innovation must be met with commensurate investment if it is to generate a meaningful return.
  • The pace of technological change and disruption to legacy systems may mean incumbents are unable to remain competitive; the degree to which new technology is able to take effect (and how fast we choose to modernise regulation) directly impacts our rate of innovation and productivity.
  • Blockchain (“utility”) tokens have the potential to be a novel class of financial product that could supplant traditional models of corporate ownership by combining the unit of ownership over the software network with the unit of use of the software network. It is unclear whether existing regulatory frameworks can adequately capture the time-based progression of these kinds of tokens. For example, many utility tokens are biphasic such that they could be structured as a traditional equity in the early phases of network formation, and after certain conditions are met, have its legal and tax treatment changed in accordance with its change in function upon network effect “maturity”.
  • Permissioned blockchains can be leveraged by industry consortia to form shared services of common industry processes. Given the right privacy design, such application-specific permissioned blockchains can also provide a cheap, fast, and open platform for digital innovation. The ELNO iOp experience presents a perfect opportunity to validate the economic benefits of this. An independent study to verify the economic viability of blockchain-based industry interoperability solutions would provide tremendous insight. 
  • Centralised applications can be built today using decentralised technologies, making them forward compatible for decentralisation.


  • “Open Tech” presents an opportunity to assess future impacts in the context of competing with domestic offerings in a similar fashion to the potential impacts from the entry of “Big Tech” into financial services.
  • Financial services are regulated because of their potential impact on consumers. “Big” technology should be regulated with the same lens given our increasing collective understanding of the risks associated with centralised data mismanagement or malpractice.
  • Updates in regulatory language generally suffer from a significant lag with respect to related technologies. Hence, an appropriate sandbox or similar scheme should be established to support alternative technology solutions where specific regulatory exemptions can be provided if the principles of the legislation remain wholly satisfied, for example, using cryptographic proofs over data capture to satisfy KYC principles.
  • Technology decisions on market interoperability impact market competition. The best way to support competition and innovation is to enable the composition (resp. decomposition) of products and services in an open market fashion. Intra-market interoperability schemes which do not support such decomposition serve to suppress specialised functional offerings. Obversely, the requirements for entry on potential participants is increased, resulting in fewer participants with more monolithic architectures.


Block8 would be happy to further discuss our thinking on any of the topics covered above, including specific detail on solution architectures and demonstrations of currently working distributed ledger systems developed to address the challenges and opportunities outlined in the Issues Paper and our Response.

Our experts are also available to assist with research mapping the value chains for centralised and decentralised approaches, the identification of the highest-value areas for a consumer-centric data infrastructure, or working with the Government and other members of industry in the development of pilot or production programs.


About the Author: 


Samuel G Brooks is Block8's Chief Technology Officer.

He is an expert in developing decentralised software products and has designed numerous solutions for startups, enterprise, government and OpenTech since 2014.

Samuel regularly speaks at technology conferences, meetups and podcasts, and holds several advisory positions on technical industry boards and committees. He is a also a heavy contributor to blockchain and fintech-related public inquiry and writes about the nature and benefits of distributed ledger technology on our blog.

Samuel holds a degree in Electrical Engineering from UNSW, and has stayed close to both the code and the latest research ever since encountering Bitcoin in 2011.

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