As regulators and lawmakers begin to move towards formal regulation of crypto assets such as NFTs and Bitcoin, Australian fintech businesses and startups are waiting with bated breath.

Although the most famous applications of blockchain remain cryptocurrencies such as ethereum and bitcoin, the technology itself has many potential applications in the wider financial sector.

Speaking to InvestorDaily, Labrys chief executive Lachlan Feeney described the local sector as booming, but warned that its future prosperity was ultimately in the hands of the government.

“At this pivotal time in the industry’s development, Australian policymakers may choose to over-regulate or encourage technological innovation,” he explained.

As he said, “Blockchain is a relatively young technology and with support Australian companies have a real opportunity to secure leadership in this industry globally.”

On the other hand, “short-sighted, ill-conceived policies risk stifling innovation before the sector realizes its enormous potential.”

While the fluctuating value of cryptocurrencies has attracted significant attention from politicians around the world, Mr Feeney reiterated that there are countless ways blockchain technology can be used.

He said local businesses using the technology are already expanding on the back of newfound economic potential.

“Many are speculating that the fruits of decentralized technology will soon be upon us at the consumer level, stealing the spotlight from volatile investment market activity,” he said.

However, with the rise of notoriously volatile crypto assets such as Bitcoin and Ethereum, Mr Feeney was wary of blockchain being seen as an unregulated, fraudulent industry.

The fear here is that the desire to rein in the volatility of crypto-asset traders could lead to over-regulation and stifle potential growth for fintech businesses that want to use blockchain as a technology in other ways.

Despite those concerns, he said regulation is not only inevitable, but welcomed by the industry.

“Policy frameworks must be put in place to protect the public. Equally important is the need to encourage new economic initiatives,” he said.

As higher education institutions across the country struggle to meet the growing demand for talent in the sector, Mr Feeney said job growth will continue to accelerate in the future.

He said successful and Australian-founded businesses with blockchain solutions were producing economic value today, but that “very little” of that revenue was coming into the country at an industrial level.

“The way forward is unclear and a decision has to be made whether we want to be part of this economic revolution or stop its growth domestically,” he said.