Tokenisation, tested: Australia drops Project Acacia report

The Reserve Bank of Australia (RBA) has announced the findings of Project Acacia, a collaborative research initiative between the RBA and the Digital Finance Cooperative Research Centre (DFCRC) that sought to explore the role of tokenised finance in Australia’s wholesale asset market.

The final report provides a detailed and practical exploration of how tokenised finance could reshape wholesale markets in Australia. Drawing on 20 industry-led use cases, the report demonstrates that while tokenisation is already technically viable, its real impact depends on how markets, money and infrastructure evolve together.

The report builds on DFCRC research indicating a potential $24 billion opportunity or 1% GDP gain through adoption of digital finance in the Australian economy.

We delve into the themes of the final report below.

1. Adoption in Australian market

While the project highlighted strong industry interest in tokenising assets, its development still remains “in its early stages in Australia”. The report highlights that appetite for fixed income was the most prevalent asset class, consistent with global trends. At a structural level, it also observes that Australia’s wholesale markets have historically lacked dynamism compared to other parts of the financial system.

Adoption of tokenisation faces institutional and structural constraints, specifically:

• legal and regulatory uncertainty, including questions around ownership, settlement finality and regulatory classification;

• coordination challenges, requiring alignment across issuers, investors, custodians and infrastructure providers; and

• interoperability risks, which may lead to liquidity fragmentation and capital inefficiencies.

The report emphasises that scaling tokenisation will require “more enduring mechanisms for coordination across a wide range of participants”. Against this backdrop, tokenisation is framed as strategically important to Australia’s financial system. It has the potential to enhance market dynamism, lower funding costs, attract international capital and strengthen resilience, with the report emphasising that such goals are “in the national interest” while also requiring seamless access for global investors given the role of offshore capital in Australian markets.

2. Tokenisation as a structural efficiency and market reform driver

Project Acacia finds that tokenisation can materially improve wholesale market efficiency, resilience and functionality, but the extent of improvement is dependent on how tokenisation is integrated into market infrastructure and workflows, rather than simply digitising existing structures.

Across the use cases, the benefits were evident at multiple points in the asset lifecycle, particularly where manual and fragmented processes were replaced with automated and integrated systems. These included:

• faster issuance and settlement cycles;

• reduced counterparty and settlement risk;

• lower operational errors via automation; and

• improved access to liquidity (including 24/7 markets).

  
  

However, the report noted that some improvements, particularly around timing and transparency, could also be delivered through incremental reform to existing infrastructure (e.g. faster payment rails or extended settlement hours) rather than through tokenisation.

3. Programmability and “atomic” settlement

The report identifies programmability as the core innovation takeaway from the project. In particular, atomic settlement fundamentally changes how transactions are processed.

Atomic settlement ensures that “the transfer of assets and payment occurs simultaneously… eliminating timing gaps and partial settlement”. This enables:

• true delivery-versus-payment (DvP) with no settlement risk gap;

• straight-through processing from trade to settlement; and

• fully automated lifecycle functions (e.g. coupon payments, redemptions).

  
  

Closely linked is the concept of composability, where multiple financial processes can be combined into a single transaction. Processes that previously required “multiple intermediaries and systems” can instead be executed as a “single atomic transaction”. Together, these capabilities allow markets to move from sequential, intermediary-driven processes to integrated, programmable execution environments.

4. Tokenised money as a critical enabler

A consistent theme emerging from Project Acacia is that the benefits of tokenised assets are realised in conjunction with innovations in digital money and settlement infrastructure, rather than in isolation. The report emphasises that tokenisation, when combined with appropriate forms of digital money, has the potential to enhance the efficiency, resilience and functionality of wholesale financial markets.

To test this interaction, the project examined a range of settlement assets, including stablecoins, tokenised commercial bank deposits, a pilot wholesale central bank digital currency (wCBDC), and traditional Exchange Settlement Account (ESA) balances. These were deployed across multiple use cases to assess their suitability for facilitating transactions in wholesale tokenised asset markets.

The use cases demonstrated that integrating digital forms of money with tokenised assets can support key functional improvements, including the ability to achieve delivery-versus-payment outcomes (including atomic-style settlement), enable continuously available (24/7) settlement infrastructure, support programmable and conditional payment functionality, and reduce settlement risk and operational frictions.

5. Continued centrality of the two-tier monetary system

Despite innovation in private money, the report reinforces that central bank money will remain foundational. It continues to act as the ultimate settlement asset and supports financial stability.

Central bank money is described as an “anchor and enabler” of the future system, with the two-tier structure evolving rather than being replaced:

• central bank money provides trust and stability;

• private tokenised money supports innovation and scalability; and

• interactions between the two maintain convertibility and confidence.

  
  

Importantly, the report highlights that stablecoins and tokenised bank deposits may have “complementary roles… reflecting differences in scalability, use cases and trust”.

6. Legal and Regulatory Reform as a Precondition for Scale

The report consistently identifies legal and regulatory clarity as a prerequisite for scale. It states that clarity is an “important prerequisite” for market development.

Key areas requiring further development include:

• legal recognition of tokenised ownership structures;

• settlement finality in DLT environments;

• regulatory classification of tokenised assets and market infrastructure; and

• prudential treatment of digital asset exposures.

Industry participants also emphasised the need for:

• longer-term regulatory or innovation sandboxes; and

• clear pathways from experimentation to commercialisation.

Without these, uncertainty may continue to constrain investment and adoption.

7. Interoperability as a System-Critical Requirement

Project Acacia makes clear that the future system will not be built on a single platform. Instead, it will involve multiple DLT networks and traditional systems operating alongside each other. The report states that a tokenised ecosystem will “most likely consist of a range of traditional and DLT networks”. To function effectively, this requires:

• interoperability between platforms;

• integration with existing payment and settlement systems; and

• common standards across assets and infrastructure

Without this, the report warns of:

• liquidity fragmentation;

• inefficient capital allocation; and

• the emergence of “walled gardens”.

  
  

What is the next phase for Project Acacia?

The report concludes that transformation cannot be delivered by any one institution. Instead, it requires sustained coordination across industry, regulators and government. Barriers to adoption “transcend the roles… of any single institution”. The proposed next phase therefore focuses on:

• enhanced regulator–industry collaboration;

• development of a digital financial market infrastructure sandbox;

• continued exploration of tokenised money, including wCBDC and deposit tokens; and

• infrastructure upgrades to support tokenised settlement.

Written by Steven Pettigrove and Tahlia Kelly