Mark Bailey joins Amy-Rose Goodey on The House is Digital for a conversation on regulation, capital markets and Australia’s opportunity within the evolving digital economy.
As a Corporate Finance Director and Director of Forensic Accounting at Hall Chadwick, Mark shares insights from more than 20 years working across business valuation, disputes, corporate finance and emerging technologies.
The discussion explores the economic opportunity presented by blockchain and digital assets, the role regulatory certainty plays in unlocking institutional capital, and the challenges facing Australian innovators as global jurisdictions move quickly to attract talent and investment.
The episode also examines stablecoins, tokenisation, AI-driven financial systems and the growing convergence of technologies reshaping finance and digital infrastructure.
A practical discussion on capital, innovation and what Australia must do to remain competitive in the next phase of the digital economy.
speaker-1: Thanks for having me, Amy Rose. Great to be here.
speaker-0: So we’ve had over the past twenty years, I would say the internet has totally transformed the world. And now you’ve seen digital assets and blockchain also transforming all sorts of different industries. So I I really wanna hear historically, well like what’s your version of events and and where are we at the moment?
speaker-1: That’s a big question. It has changed considerably. And certainly in terms of what we’re seeing is the activity ⁓ is around ⁓ the stable coins and ⁓ becoming institutionally ac acceptable. And ⁓ obviously we’ve got the ⁓ blockchain center of research paper with the nineteen billion dollar. annual productivity improvements. ⁓ so that’s you know, that’s that’s just an amazing ⁓ statistic and opportunity for Australia. So the question I think is just how do we how do we capitalise on that and and fast? You know, it’s it’s on the table. Let’s not see it disappear off the table because we don’t move fast enough.
speaker-0: We’ve seen builders in Australia want to move. They they want to build. They want to innovate. They want to see that nineteen billion plus impact that everyone is talking. And and ⁓ so that’s the DECA and DFCRC joint research project. It’ll be launched soon. It’s actually higher than nineteen billion annually or one percent of Australia’s GDP. So we’re where we have an opportunity to to see the that. ⁓ come into a fruition. But at the moment, if if we continue on that track, I think we are probably looking at more maybe three or four billion in productivity or efficiency gains. So if we’re faced with this dilemma, what is it that is most important? What should we be focused on? You’ve seen businesses succeed. You’ve seen them listed. You’ve seen them invested in. So what are we missing?
speaker-1: So I I think in terms of where we’re where we’re up to is the and obviously DECA has done a lot of work in this regard is the regulatory ⁓ uncertainty needs to be dealt with. The the blockchain technology is well proven in terms of all its advantages. The regulatory certainty, what you know, what why Why is that so important? Regulatory certainty essentially lowers the cost of capital and more capital will be available. Capital is super important because it enables growth, innovation, and enables people to take a risk. And just a simple example when when interest rates are six, eight percent, people don’t extend themselves, whether it’s buying a house or a beach house or whatever it is, that try and preserve cash because interest rates are so high. So capital markets are a market. So there’s competition for money. And obviously AI at the moment is sucking up monstrous amounts of capital. SaaS companies are struggling. Their cost of capital has gone up because the uncertainty of their business model going forward. And blockchain’s in the middle of all of that. And in terms of raising certainly public funds, ⁓ it it has struggled. There’s only a handful of companies worldwide ⁓ that are listed on public stock markets and and that’s really a signal that from an institutional investor’s perspective the risks are too high and that risk is really the regulatory risk because institutions will accept execution risk. That’s the game. That’s chasing alpha but ⁓ regulatory risk is, you know, that institutions can’t really play in the gray. Now I I understand there’s two streams if you like in terms of the blockchain space and there’s the there’s the ⁓ stream that doesn’t want institutions and wants to build an alternate financial system and and I respect that and w ⁓ but in terms of capitalizing on the nineteen billion ⁓ plus innovation productivity savings that will require institutional support those gains are going to come cost savings of institutions, which hopefully will be passed through to Australian consumers and businesses. so that means raising capital with from institutions. It means transacting and dealing with institutions. So the regulation is super important.
speaker-0: My experience with startups, for example, often and this is probably more in the past five years, more recently not so much, for a couple of reasons. So over the first five years or so ago, our startups, because there was a severe lack of regulatory clarity, but they were still building, but they were building in stealth because they didn’t want to signal that they were building a fintech. that might get the attention of a regulator. They were testing it, ⁓ not widely with family and friends. however, when it comes to implementing it, you can’t you can’t get investment unless you’ve got that regulatory clarity. You like you say, the investors don’t want to take the risks. More recently, there has been no startups really in in our space. And I think even FinTech Australia did a study and and says the the same thing. If you don’t have that clarity, you’re not going to have the innovation. So that we’re definitely up against a little bit of a a block and and some friction there. We’re looking at the next 12 to 18 months, we’re looking at regulatory clarity. We have both sides of government in support of the digital asset platforms bill. And there’s multiple reforms. I know at DECA there is there’s five consultations on the table. So there’s so much regulation coming. So there’s clarity coming. You talk about the institutions coming in ⁓ and, you know, building out the capability of Australia’s digital economy. But do you think the opportunity has been missed for some of the early stage, you know, those grassroots innovators? Some of these big institutions started off like this. Do you think there’s the opportunity for the the grassroots might have been lost or is there still
speaker-1: Hope. Well, th there’s always hope. ⁓ I think there has been some leakage of people going offshore. That that’s absolutely the case. ⁓ and that will that will continue to be the case because the the carrot of regulation has been floating around for some time. Regulation has its dangers as well. and and I d I do worry that the longer it takes you end up having you know, punitive type of regulation. You know, d are we operating in, you know, you think back to school, you know, the the the teacher that was slack was super fun for a couple of periods and then he’d crack the SADs and everyone would have to ⁓ go to the principal or be on weekend detention because because of the overreaction. ⁓ so I think there is some risk and and that ⁓ No, unfortunately I think the regulation will hurt some of the current small Australian players. ⁓ so so so whether they consolidate or they’ll have to undertake some, you know, they should be ⁓ thinking about it now in terms of well what and I’m sure they are, what what does regulation mean for them? And the other issue is I think Australia’s obviously not the world’s biggest economy. how does our regulation fit, you know, because we’re talking about international money, programmable money, like super big concepts. If our regulation is not consistent with other countries, then that’s like unless it’s way better that attracts people, ⁓ that’s not gonna help us or there it will limit the advantages. You know, I’m not the lawyer, but I’m pretty sure that concept of DAP is not in regulations in other countries. So, you know, how much does c do c international companies have to spend on lawyers to try and work out whether they’re a DAP or not in Australia? And I understand our approach is to try and stuff the blockchain into current historic legal concepts in terms of the corporations law, et cetera, where other countries are writing ⁓ standalone legislation. So It’s it needs to happen pretty quickly and it’s needs to be consistent with other countries.
speaker-0: I think we’ll see when it rolls out. Mika, for example, there was a lot of it was the North Star for a while. And since it has been rolled out, there has been review of, you know, whether it is the best or or not. So it’s been a learning opportunity. I and I don’t think the the regulators and policy makers ⁓ can perfect this. think it might even be too soon to perfect it. But I think leaving this open door to evolution of the legislation and and perhaps moving a bit faster in the next evolution would be helpful, not ten years. Yeah, I I think we do need to be on par because there’s a deficit. Everyone like the the startups have to go overseas to more favorable jurisdictions. I mean the UAE is one example, they are paying Australians to head over and and accommodating them, giving them offices and everything they could ever want if they move their business over there. So yeah, we’re at risk.
speaker-1: We are hopefully the AFL doesn’t move to the buyer. ⁓ the I was just thinking in terms of you know, tangible evidence of the impact of regulatory change and approval is you know, the the explosion of the ETFs in the US once that that was enabled. The you know the when the Genius Act was passed, Coinbase’s share price went up ⁓ double digit during the day. I think it ended that day about eight percent up. Now I’m I’m sure there was already a lot of ⁓ anticipation of the ⁓ legislation being passed already built into the share price, yet it still went up eight percent at the close of that day, that single day. So yeah, it it can’t be ⁓ underestimated that impact. You know, and and then you you look at ⁓ you know little examples, well not little, but you know the the whole Silicon Valley thing, that’s what happens when you get it right. It attracts, you know, capital attracts talent. That attracts innovation. There’s there’s a organization called the Software Equity Group that ⁓ they did some really interesting studies around, well, you know, what comes first? Is it innovation and growth and then the capital follows? Or just is it capital that comes first and then the innovation growth follows? And and the and they’re Empirical evidence was that it’s the capital that comes first that enables the growth.
speaker-0: And for capital though, you need confidence.
speaker-1: Exactly. And that’s so back to that the regulation thing. So it so it’s not a singular linear thing. It it’s ⁓ it’s it’s exponential growth you’re talking about.
speaker-0: And when we talk about exponential growth, we’re also talking about the intersection of multiple technologies. We can think about blockchain and digital assets, but the tech stack of the digital economy is more. We’ve got AI agents, we’ve got automatic transactions, ⁓ and some of these AI agents, and I know I might be going too big, but it’s just it’s moments away because we already have all the technologies that are required. To build these tech stacks and to build this digital economy, which in 10 years you know it’s going to exist. It’s just a matter of time. So when we think about that evolution or that the digital world that we’re going to be living in, you’ve seen, I’m gonna stick with 20 years over the 20 years, ⁓ you’ve seen different technologies evolve and and leverage from each other. Do you think that I’m not gonna talk about timelines here, but is there an opportunity for a number of different technologies to come into play here?
speaker-1: Well, in in terms of the the the AI agents and programmable money, like that that’s that’s here, that’s now. I understand there’s there’s some major international banks building end to end technology for end to end trade, which is fully autonomous. so that that’s happening right now.
speaker-0: And that’s exciting and also scary. It is. So if we talk go back to regulation, if we talk about regulation as an enabler, it brings trust into an industry and into a country. ⁓ there is capital invested when we have that. But then when you have all of that investment, and then there’s this tech stack that evolves, and you have these AI agents, and there’s Heaps of technology being built, outpacing the regulation that we’ve just ⁓ developed in response to, you know, digital assets. And now we need to further evolve the legislation to incorporate autonomous AI agent payment systems. So how how do you view that? What’s Australia’s capability, do you think?
speaker-1: Well, i from a regulatory perspective, that’s that’s ⁓ that’s just life. when when I started work, I think the the good old tax act was maybe about that big. Okay, and now I think it’s about that big. So Yeah, I think when we had tax simplification, they added a million words to the act. ⁓ that was back in ninety-nine. so
speaker-0: ⁓ Full credit to the tax lawyers. Yeah.
speaker-1: From a regulatory perspective, yes, it will it has to keep innovating and moving with the times. From a technical perspective, there’s clearly lots of talent in Australia. ⁓ clearly we have lost talent. ⁓ we need to start attracting talent back, you know, those that we’ve lost and attract more talent. So I I do Understand there are a lot of internationals that are floating around lining up to come to Australia in expectation of the ⁓ of the legislation. I don’t want to say she’ll be right, mate, but I th I think we I think we will. ⁓ the there there’s as you say, there’s ⁓ bipartisan political support. ⁓ there’s plenty of fantastic companies and smart people in Australia ready to make it happen and then Yeah, hopefully with when the legislation comes through there won’t be too much damage in terms of the smaller businesses and that people can raise capital and start transacting with institutions and and also you know, r regulation will protect consumers, it will attract more customers. I know there’s a lot of ⁓ talk about ⁓ difficulties with self managed super funds and auditors and things like that. So a lot of those issues should be put to bed and the builders can get on with building.
speaker-0: So you talk about the builders, ⁓ and then also the institutional in into i international on the global players coming in. We have in Australia a tendency to have the big four of something or the big two of something. And you know, we’re we’re small ⁓ when in comparison to other jurisdictions. We’ve got the big four banks and we’ve got the, you know, the two big supermarkets. Because it appears that and and that’s my view as well, that international Players are coming in and are waiting on the sidelines. And they have been for years waiting for this regulation to come in, invest, and consolidate, acquire. You know, that’s what they’re looking forward to. But in the meantime, you know, the builders, like you say, are pausing. You know, they’re not, they’re definitely wait- it’s a wait and see attitude. Do do we build the next product? The Australian businesses, do do they build the next product? And I I I worry because you will have the big international players that will take the market. And then what happens to our innovators? So i have you seen that before i historically?
speaker-1: yes, ⁓ his historically, historically, international finance companies that come to Australia have essentially come and gone. ⁓ it it’s you know, those big four banks are extremely powerful. Yeah. ⁓ so yeah, whether they take them head on or ⁓ Find niches to operate in. yeah, it’s it’s gonna be very interesting to find out what happens.
speaker-0: Yeah, it is. I would love to see the ability to encourage or to build systems around startups and innovation in Australia. I know that ASIC is doing its review of the sandbox and enabling some of that innovation in fintech. I think that’s a good, a massive opportunity, actually. but I do think that there needs to be a careful eye on You know, who who’s coming in? And is that I know that it’s going to I think it’s it’s going to bring wealth into Australia and we can’t poo-poo that. That’s a massive opportunity. But we also need our local players to be able to to build and and do big incredible unicorn things. So I think I might go a little bit to the left field now. you w we talked a little bit about stable coins and you know, let let’s look at particular technologies and the opportunity that we have in Australia for stable coins. And maybe we can talk a little bit about tokenization as well. But stable coins, it feels like they’re the biggest opportunity for Australia at the moment.
speaker-1: Yeah, they they do seem to be in the gun at the at the moment. which again, that’s because of some of the clarity that ⁓ ASIC brought to the table at the end of last year. so I I believe we have four ⁓ stable coins in Australia. Each have a different target market kind of s slant in in how they’re approaching the the market. the So so yeah, yeah, I I would expect that’s going to ⁓ grow substantially over the coming years. and and there seems to be government support for that as well, because as you say, it’s it’s important that we as a country ⁓ producers in this market and not consumers. That is, we want Australian companies and innovators. ⁓ in terms of the real world asset tokenization, I haven’t seen a lot of it. In terms of well, haven’t seen it come to fruition yet. ⁓ we’ve certainly ⁓ been involved in a number of projects from a concept perspective. It’s the real world asset tokenization is interesting in that you know the the blockchain part of it, it’s really just a pretty boring back office admin function. so it’s not it’s not gonna be front. Page of your prospectus that we’ve tokenized ⁓ what whatever the asset is. It’s you know, it’s maybe a footnote to the profit and loss that that’s why the margin’s higher or the investor’s return is point one of a percent higher. so it it’s probably something that will I think come from the big guys as as we’ve seen, I think just recently with ⁓ BlackRock in the US. Be because they’ll build something big enough that the point one of a percent or what you know, whatever it is that enhanced return to investors matters.
speaker-0: And I think BlackRock has have been leading the charge on this for a long time. There’s an acceptance that blockchain and and most technologies will become ubiquitous. No, no one will know or care that there’s a certain technology that is enabling them to do certain things. And when I do digging, because I like to know who’s using blockchain, when they’re using blockchain, and particularly if the Australian government is leveraging from blockchain as well. But it’s a footnote. It’s really hard to find. And it’s really hard to to know who’s developing the technologies and at what stage, at what, you know, w where they’re doing it in Australia. So when you say it’s a footnote, is that is that purposefully, or it’s just because it’s just it is that that’s just part of our business.
speaker-1: It’s because those that aren’t in the industry and not really fussed about the technology, they just want the return. So so a number of our fintech clients ⁓ do have ⁓ blockchain projects on the go. ⁓ but they don’t really broadcast it loudly, ⁓ because it’s they’re just trying to maximize returns.
speaker-0: Interesting. So we’re already on that path to ubiquity. Sure. Well, that’s exciting. Do you have anything you would like to close on?
speaker-1: Yeah, for sure. Well, like it’s been a theme of the entire conversation. in r in respect to delivering on the ⁓ nineteen billion plus ⁓ productivity improvements. ⁓ the industry has proven itself in terms of the technology. The technology works. ⁓ the it’s proven it’s Ethics, if you like, in terms of you know, it’s the industry that’s knocking on ⁓ Canberra’s door for regulation. It’s not the other way around in terms of you know, the government waving a big stick saying you’ve been bad, we’re going to bring in this legislation to control you guys. It’s the other way around. So the ball is really in ⁓ Canberra’s court to get the legislation through so that ⁓ they they can deliver on their commitment to the voters in terms of productivity improvement and that we as an industry can del deliver.
speaker-0: Thanks so much Mark. It really is a marathon, isn’t it?
speaker-1: Well, you guys have been amazing, the the effort that you put in and the industry generally, like the time the you know, some of those meetings in Canberra, if if you added up the hours that people ⁓ are investing around the room to to get this through, it’s ⁓ it’s massive.
speaker-0: Thousands of hours. Yeah. Well it’s good to have you, Mike. Thanks for coming.
speaker-1: Thank you, thanks for having me having me rose.
speaker-0: Digital, where policy meets innovation. Stay curious, stay inspired, and be part of the movement Building Australia’s Next Economy. The future is happening now. See you in the next episode.