Work Smart Not Hard: Regtech and the Productivity Commission

“The intent is to create a secure, efficient and trusted process of digital end-to-end land transfer, with reduced process time for sales, transparent information and digital records”

For anyone who has participated in the traditional land transfer process, which for a long time involved going into a crowded room (pre-COVID) with a mountain of paper and a handful of bank cheques (ask your parents), this resonates strongly. Even changes to electronic conveyancing, while eliminating many paper-based processes, leaves centralized systems at risk of cybersecurity and data breaches.

While the paper states that “in Australia, electronic conveyancing (or e-conveyancing) has taken off, but use of blockchain has not been tested for property exchange,” there are various studies, pilots, and tests which have taken place around the use of blockchain to enable the transfer of real property. The State and Territory lands titles offices have yet to express outright enthusiasm for the idea (unlike the ASX), but there is very clear potential for, at a minimum, the back-office systems of the land titles office to shift to a tokenized model to be ready for greater API interfacing in future.

Since the privacy of individuals or the security of confidential information (private or commercial) are necessary parts of the regulatory frameworks in which data is collected and used, policymakers and regulators need to consider how aspects of these regulations can limit the use of data in RegTech solutions.

The Privacy Act 1988 (Cth), for instance, requires that data be deleted from a dataset once its purpose has been served, which principle stands in contrast to the radical transparency which public a blockchain would have as a feature.

For this very reason, blockchain systems are frequently the subject of criticism for threatening the privacy and assets of its users if data is improperly written to a public chain. In a private chain situation, this issue never arises as there is still a central authority that can re-write the data to ensure compliance.

As automation and efficiency continue to be a driving motivator for the Australian economy, new and innovative blockchain powered solutions, both internal and client-facing, will offer greater options to improve regulatory compliance for business. Following the release of an Interim Report by the Australian Senate Select Committee inquiry into FinTech and RegTech, the Australian Law Reform Commission (ALRC) has confirmed the start of a three-year review into how financial services regulation could be made more efficient, and opportunities for innovation in FinTech and RegTech, particularly using blockchain systems of will continue to be at the forefront of the drive.