Sebastian Sinclair

ANZ, one of Australia&#8217;s “Big Four” banks, has completed a transaction with tokenized assets utilizing its A$DC stablecoin and Chainlink&#8217;s Cross-Chain Interoperability Protocol, or CCIP.



The development showcased the bank&#8217;s capability to transfer funds across both open and private blockchain networks, furthering experiments being conducted to test the efficiency and security of deploying real-world assets on-chain.



According to a statement by Chainlink on social <a href="https://x.com/chainlink/status/1702265237171212530?s=20">platform X</a>, formerly known as Twitter, the move Wednesday “builds on the lessons learned” from the Swift blockchain interoperability initiative, originally conducted in June.



The effort, a <a href="https://blockworks.co/news/banks-can-10x-the-blockchain-industry-says-chainlink-co-founder">joint venture between leading global banks</a> and The Society for Worldwide Interbank Financial Telecommunication, seeks to test the limits of blockchain interoperability.



Its objective: Offering major financial institutions a centralized gateway to various networks, in a bid to reduce the operational hurdles and investment required to link the global financial system.



Banks involved included BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange (SDX), and The Depository Trust and Clearing Corporation (DTCC), in addition to ANZ or the Australia and New Zealand Banking Group.



Chainlink has played a central role in understanding whether banks and the crypto sector can coexist in harmony, challenging commonly held concerns associated with retail CBDCs.



Chainlink’s product, which has so far been well received, serves as a &#8220;<a href="https://blockworks.co/news/chainlink-ccip-launch">universal messaging interface</a>&#8221; for communication between various chains by utilizing its Oracle network.



CCIP works with <a href="https://www.veradiverdict.com/p/ccip">three separate Oracle networks</a>. Two of those networks handle sending/receiving messages and transferring value, while another watches over to make sure those transactions aren&#8217;t risky.



“The bank’s work with its A$DC stablecoin and the tokenization of real-world assets has already provided us with valuable lessons as we continue to investigate enterprise-grade use cases,” Nigel Dobson, ANZ’s banking services portfolio lead said in a statement on Wednesday.



“Based on market activity, we expect the continued adoption of digital assets will result in the proliferation of multiple assets across many blockchain networks.”



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Australian Bank ANZ leveraging Chainlink’s CCIP for cross-chain operability

<div id="highlights-block_62b920be04bb9" class="highlights">
 <ul>
 <li>Zerocap, a digital asset manager and custodian, acted as a market maker for the Victor Smorgon Group in a landmark tokenized carbon credit transaction</li>
 <li>It&#8217;s the latest use case for the bank-backed Australian stablecoin following a $30 million pilot transaction in March</li>
 </ul>
 
</div>



A stablecoin issued by one of Australia&#8217;s biggest banks, ANZ, has been used to purchase tokenized carbon credits in a landmark transaction aimed at testing the asset&#8217;s feasibility in carbon abatement instruments.



Victor Smorgon Group (VSG), a private investment firm managing the <a href="https://www.afr.com/rich-list/from-blood-and-guts-to-crypto-inside-the-smorgon-family-office-20220426-p5ag5y" target="_blank" rel="noreferrer noopener">Smorgon family</a>&#8216;s billions in assets, bought Australian Carbon Credit Units in their tokenized form from carbon trading platform <a href="https://www.betacarbon.com/" target="_blank" rel="noreferrer noopener">BetaCarbon</a>, according to a statement Sunday.



BetaCarbon tokenizes Australian carbon credits into its BCAU token, with each representing 2.2 pounds (1&nbsp;kilogram) of carbon captured.



&#8220;BetaCarbon is the first provider to tokenize Australian Carbon Credit Units (ACCUs) using blockchain technology. Our long-term objective is to trigger more carbon sequestration and removal and drive up the cost to emit CO2 to incentivize economy-wide emissions reduction,&#8221; BetaCarbon CEO and Founder Guy Dickinson told Blockworks.



It&#8217;s the latest for the <a href="https://cms.blockworks.co/anz-becomes-first-bank-to-mint-australian-digital-dollar/" target="_blank" rel="noreferrer noopener">A$DC stablecoin</a>, launched in March, which became the country&#8217;s first dollar-backed stablecoin issued by a bank — redeemable on a 1:1 basis for Australian dollars. In that instance, A$DC was used to facilitate a $30 million pilot transaction using a smart contract that was compatible with the Ethereum virtual machine (EVM).



In the latest transaction, VSG first sent a request to ANZ asking to convert a set amount of Australian dollars into A$DC. ANZ minted the equivalent amount and passed it along to digital asset fund manager and custodian <a href="https://zerocap.com/" target="_blank" rel="noreferrer noopener">Zerocap</a>.



The fund manager then acted as the market maker for the carbon credit transaction whereby a quote was sought after in Circle&#8217;s USDC stablecoin, BetaCarbon&#8217;s preferred pair, before a market was created by Zerocap in A$DC/BCAU on behalf of VSG.



The transaction provided A$DC/BCAU liquidity while offering both VSG and Zerocap redemption rights for A$DC, according to the statement.



&#8220;Everybody involved, particularly ANZ and Zerocap, really want to expand the use of the stablecoin [A$DC],&#8221; Zerocap&#8217;s CEO Ryan McCall told Blockworks in an interview. &#8220;Our thesis is that we will see the tokenization of everything including bonds, equities, property, the works.&#8221;



He said his firm was demonstrating use cases for tokenized assets beyond cryptocurrency. Tokenization refers to the process of taking an asset and converting it for use on a given blockchain. Zerocap also provided custody assistance to VSG in March, where the technology was praised for its processing speeds.



When asked about the security backing the transactions, Zerocap told Blockworks it uses various custody technology platforms, including Fireblocks, for the creation and storage of private keys. The asset manager also said it has a bespoke insurance policy from Lloyd&#8217;s of London — one of the world&#8217;s largest and oldest insurance underwriters.



Following the success of the deal, McCall said Blockchain technology provides for &#8220;irrefutable settlement,&#8221; as well as &#8220;secure custody&#8221; and &#8220;frictionless transacting.&#8221;



&#8220;With Zerocap providing custody and creating a market for carbon credits with A$DC, we&#8217;re proving how efficient a digital asset ecosystem can be for trading and settlement of an asset that most people don&#8217;t even associate with crypto,&#8221; McCall said.



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ANZ Bank’s Stablecoin Used To Purchase Tokenized Carbon Credits

<div id="highlights-block_623bb0bddb220" class="highlights">
 <ul>
 <li>Australia&#8217;s ANZ has minted $30 million worth of its bank-backed A$DC stablecoin in a national first</li>
 <li>The pilot transaction saw the coins settled by the bank into an Ethereum wallet held by Zerocap on behalf of Victor Smorgon Group</li>
 </ul>
 
</div>



Australia&#8217;s ANZ Bank has become the first major financial institution in the country to issue and execute payment of a stablecoin linked to the nation&#8217;s dollar.



Leveraging its Ethereum Virtual Machine (EVM) compatible smart contract deployed through the Fireblocks platform, ANZ <a href="https://media.anz.com/posts/2022/03/anz-completes-landmark-stablecoin-payment?adobe_mc=MCMID%3D56904523190478420204553646360351941254%7CMCORGID%3D67A216D751E567B20A490D4C%2540AdobeOrg%7CTS%3D1648077719" target="_blank" rel="noreferrer noopener">said Wednesday</a> it had successfully minted $30 million worth of its bank-backed A$DC stablecoin.



The bank worked with Fireblocks, Chainalysis and OpenZeppelin to create the &#8220;in-house purpose-built&#8221; stablecoin smart contract. ANZ said the coins were transferred between the family office and digital asset fund manager Zerocap before it was later redeemed back into fiat.



It marks the first time in the country that such an endeavour has been undertaken by an Australian bank.



Specifically, the bank acted on a request by Victor Smorgon Group — the late billionaire&#8217;s eponymous family office which was later settled into the office&#8217;s Ethereum wallet hosted atop custody infrastructure owned by Zerocap. The family office is a client of both the bank and Zerocap.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“In this particular transaction it was 20 minutes end to end, including minting,&#8221; said Zerocap&#8217;s CEO Ryan McCall. &#8220;We ran tests beforehand which took longer as we carefully moved through each step and I would expect future transactions to be even shorter once there is a tested, repeatable process in place.“</blockquote>



The move allowed the family office to avoid having to pay high conversion fees between the Australian dollar-backed stablecoin and Circle&#8217;s USDC — a US dollar-backed stablecoin that Zerocap uses to make trades on the group&#8217;s behalf.



Given blockchain&#8217;s quick settlement times, both parties were able to significantly reduce the risk of slower transaction speeds often associated with traditional finance. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;Stablecoins are a new way for customers to transact and in this case was an efficient and direct way for Victor Smorgon Group to access Zerocap’s digital asset exchange and move funds&nbsp;across a decentralized network,&#8221; said ANZ Banking Services Lead Nigel Dobson in the release.</blockquote>



Amid a major <a href="https://cms.blockworks.co/australia-seeks-licensing-of-crypto-exchanges-via-digital-services-act/" target="_blank" rel="noreferrer noopener">pivot in policy</a> for digital assets down under, banks are now looking to get some skin in the game following years of fence-sitting. Australia&#8217;s largest financial institution, Commonwealth Bank, began offering its customers the ability to buy and sell crypto through its native app toward the end of last year.



Commbank’s Sophie Gilder, managing director of Blockchain and Digital Assets, said Monday the nascent asset class was &#8220;already mainstream&#8221; and that user uptake of those buying crypto through the app had been &#8220;<a href="https://cms.blockworks.co/commonwealth-bank-says-crypto-already-mainstream/" target="_blank" rel="noreferrer noopener">overwhelmingly positive</a>.&#8221;



The issuance of the country&#8217;s first bank-backed digital dollar follows calls by Australia&#8217;s Treasurer Josh&nbsp;Frydenberg for the country to begin exploring a central bank digital currency. 



While not yet a central part of the government&#8217;s financial package, the treasurer and the incumbent Liberal Party are hoping their sounding of the conch shell to crypto advocates around the country will be enough to lift them from a <a href="https://www.reuters.com/world/asia-pacific/australian-pm-morrisons-party-faces-shock-state-election-loss-2022-03-19/" target="_blank" rel="noreferrer noopener">predicted defeat</a> in the upcoming election in May.



Some question the truly decentralized nature behind some of the world&#8217;s largest institutions, offering alternatives to those currently provided by the private market. USDT, or tether, whose market cap surpassed $80 billion earlier this month, has continued to hold up <a href="https://cms.blockworks.co/hindenburg-research-targets-tether-with-1m-bounty-program/" target="_blank" rel="noreferrer noopener">despite long-term concerns</a> over the dollar backing of its reserves.



Still, those entering the crypto industry for the first time see the private issuance of stablecoins as a risk and prefer to defer to major institutions whose holdings, they say, can provide a more secure financial experience.



&#8220;If digital assets are going to become ubiquitous, consumers and institutions alike need safe rails, said McCall. &#8220;Take a look at Tether and the controversy surrounding that; would you rather transact in tether, or a bank-backed stablecoin?



&#8220;Also, decentralised systems aren&#8217;t going away; the future is multichain and the ecosystem will end up having substantial participation in both centralized and decentralized systems,&#8221; he said.



&#8220;The ideal outcome would be that investors can opt-in to whichever they choose.&#8221;



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