Data61, together with government agencies including Treasury, have announced they will examine what blockchain technology -- the underlying system that facilitates transactions such as Bitcoin trading -- could mean if it were adopted by both government and industry in Australia.
The announcement will provide greater detail into a small mention within the federal government's Budget 2016, where Treasurer Scott Morrison announced on Tuesday that Data61 will undertake a review of opportunities for blockchain adoption in government and the private sector, as well as testing any potential applications.
"The benefits of this technology could be profound -- extending right across our economy," Morrison said. "We are looking to position Australia as a leading global player in this exciting new area."
According to Data61, the study, which is expected to take nine months, will examine the potential benefits or productivity gains for the Australian economy; the skills Australia might require to become a global leader as blockchain technology becomes more prevalent; and potential legislative and regulatory implications such as privacy consideration.
Data61 said the review will also look into providing practical "proof of concept" projects where blockchain technology could be piloted in government services and the private sector.
Following the consultation and evaluation of suitable use cases, Data61 said an agreed "proof of concept" trial will be developed to demonstrate the impact of blockchain technology.
The research will be led by Data61's blockchain research team, Liming Zhu and Mark Staples, and will be joined by Stefan Hajkowicz from Data61's foresighting team.
Hajkowicz said blockchain technology is an example of technology that has the potential to change not only the financial services industry, but also other sectors, too, including government.
"There are currently a few potential areas where we could explore opportunities such as shareable registry information, verifiable supply chains, and assessment of aggregate risk exposure in the financial services sector," he said.
"In fact, there are also potential applications for this technology that extend well beyond the financial industry, and we are excited to explore, develop and apply the technology in both financial and non‑financial industry, in consultation with industry and government.
"Deployment of such technology could be most promising in government delivery applications."
Data61 CEO Adrian Turner said the study will provide the information that will be needed to properly consider the opportunities and challenges posed by blockchain.
"This is a rapidly emerging area and now is definitely the right time to look at what it could mean for our economy," he said.
The Australian Senate Economics References Committee said last August the GST treatment of digital currencies was the most pressing concern for Australian businesses that are using currencies such as Bitcoin, and called for changes to the GST Act to amend the definition of money.
In its report Digital currency-game changer or bit player, the committee said the Australian Taxation Office's current treatment of Bitcoin as barter for individuals creates a double taxation effect, and results in additional burdens for users.
"The committee is of the view that digital currency should be treated as money for the purposes of the goods and services tax," the report said.
Following the report, the federal government announced initial plans in March to scrap the "double taxation" treatment from those dealing in digital currency such as Bitcoin, saying removing the treatment and applying adequate anti-money laundering and counter-terrorism financing rules may facilitate further developments or use in the future.
The government acknowledged at the time that blockchain technology has attracted considerable interest and has the potential to revolutionise key services like international transfers between banks, equities clearing and settlement, and financial contracts.
It also said such fintech innovations are generating new value streams, not just in financial services but across the economy, with the government saying it recognises that Australia's financial technology sector can play a vital role in aiding the positive transition that is occurring in the country's economy.
The federal government revisited plans to remove the double application of the Goods and Services Tax (GST) applied to digital currencies on Tuesday as part of Budget 2016, releasing its GST Treatment of Digital Currency consultation paper.
In the paper, Treasury stated three options for changing how the GST impacts digital currencies: Input tax treatment similar to the UK and Europe where Bitcoin is regarded as akin to share trading, loans, or exchanges of foreign currency; changing the definition of money in the GST Act to include Bitcoin; or explicitly stating that Bitcoin is GST-free in the same manner that food is GST-free.
At the start of the year, the Australian Stock Exchange (ASX) contracted US-based firm Digital Asset to help develop solutions for the Australian equity market using blockchain technology that will be used to replace or upgrade the ASX's main trading and post-trade platforms.