A Government issued digital currency is on the agenda of the Reserve Bank of Australia (RBA) which is tapping fintech companies around Australia for guidance on blockchain technology with the latest being Novatti Group (ASX: NOV), issuers of the AUDD stablecoin. 

Novatti launched the AUDD stablecoin last year where every AUDD issued is 1:1 fiat backed by AUD. The innovative product was developed in collaboration with the Stellar Development Foundation which supported the development of AUDD in a staged approach, resulting in minimal capital contribution from Novatti.

That technology will now be applied in the RBA’s Central Bank Digital Currency (CBDC) Project which is exploring potential use cases and economic benefits for a digital currency. For Novatti Managing Director Peter Cook, the selection to participate reflects Novatti’s work in the blockchain space where they have focused on creating secure technology on the blockchain that can support their existing digital payments ecosystem. 

“By participating in this project, Novatti will help shape the future of CBDCs and promote the use cases for high governance stablecoins in Australia,” said Cook. 

“Novatti’s own stablecoin, AUDD, was created with a focus on compliance, security and utility, all of which will support the innovative CBDC project.”

For Novatti’s role in the CBDC project, they will issue a supplementary stablecoin, known as eAUDD. Each eAUDD stablecoin will be backed 1:1 by Pilot CBDC issued by the RBA and allow customers to independently verify the reserve. An invite-only group of participants will be able to obtain eAUDD on the Stellar blockchain, where it will be used to purchase a non-fungible token (NFT) in order to make a charitable donation.

While the project is Novatti’s largest involvement with CBDC to date, they have been leaders in the blockchain space for financial services with Wirex the latest fintech to tap Novatti for card issuing services.  

Under a new partnership, Novatti will issue Wirex cards in Australia which will enable residents to make card payments anywhere Visa is accepted, with a choice to pay in 12 traditional currencies or 130 cryptocurrencies. Wirex already has more than 5 million customers worldwide and has selected Novatti as their partner for expansion into Australia where users will be able to buy, hold, exchange and sell currencies through the Novatti-issued cards. 

Similar cards are issued by Novatti who were engaged by Cryptospend in 2021 which was the first time cryptocurrencies could be spent using a payments card issued in Australia. 

These new initiatives leverage existing technology and products within Novatti’s digital payments ecosystem which is on track to process more than $4 billion in Gross Transaction Volume (GTV) in FY23. The Melbourne-based fintech also holds a 91% stake in the International Bank of Australia (IBOA) which was granted a restricted banking licence in November 2022 and is expected to launch its banking services within the next 12 months. 

“As part of our strategy and positioning for IBOA, we have always said there is an exciting opportunity to leverage technology to meet the needs of modern businesses and consumers,” said Cook. 

The use of blockchain technology continues to gather momentum amongst financial institutions with their use cases proving to be substantially faster and cheaper to transfer money around the world compared to traditional banking systems. These benefits were highlighted in 2022 when the Smorgons, a prominent Australian billionaire family, utilised stablecoins to transfer $30 million within 10 minutes, compared to what would have taken several days using existing systems, while also avoiding foreign exchange fees.