In an important piece of crypto news, Westpac Institutional Bank announced its partnership with Imperium Markets and Chainlink. The goal of the partnership is to implement blockchain-based tokenization asset settlement capabilities, all of which would come through Project Acacia.
The initiative is the result of a joint effort between the Digital Finance CRC (DFCRC) and Reserve Bank of Australia (RBA). As of now, the Chainlink Runtime Environment will facilitate secure Delivery vs. Payment (DvP) settlements as it relates to tokenized assets all across not only blockchain markets, but PayTo, Australia’s domestic payments system.
Tokenisation an Important Step for Australian Markets
According to the RBA, estimates come it at nearly AUD $12 billion saved each year for asset issuers thanks to tokenization. Project Acacia builds on the six-month pilot program that the RBA runs. This program involved 24 industry participants, conducted 19 real-money transactions, and had five proof-of-concept simulations happening across a variety of asset classes.
The proof of concept run by Westpac has the goal of demonstrating that Australia’s current PayTo infrastructure is capable of handling not only the settlement, but clearing of massive wholesale banking payments that would be required when it comes to tokenizing asset transactions.
Westpac launched PayTo in 2024, becoming the first digital-first alternative to traditional direct debit payments while also allowing for real-time transactions with greater control and enhanced visibility for customers. The PayTo system is able to settle transactions by using the banks’ existing exchange settlement accounts with the RBA. This offers verified authorization, secure store capabilities, and rich transaction data.
Westpac Expanding Tokenisation Capabitliies
The Managing Director of Global Transaction Services at Westpac, Jeff Byrne, made note that the bank’s role is to provide safe, secure payment options while exploring digital currencies. Project Acacia should also extend the capabilities of PayTo when it comes to emerging technologies, showing new ways to find value while still offering superior protection to customers.
Westpac’s proof of concept also provides the opportunity to test post-quantum cryptography within financial systems. That could be achieved by using advanced encryption algorithms meant to hold up against potential quantum computer attacks.
Westpac’s Chief Technology Officer, David Walker, has described this initiative as a chance to not only create something important for the future, but as a chance to learn in a real-world environment. Westpac has a long-term equity investment in Quintessence Labs, an Australian cybersecurity company. Quintessence Labs has developed quantum-enhanced cryptography solutions, some of which have been deployed in large organization applications.
Walker has spoken about needing to emphasise strategic involvement from each stakeholder, whether that be telcos, governments, retailers, or banks, in order to take the payments architecture business to the next generation.
Focus on Regulated Institutional Applications
Westpac has been granted regulatory relief from the Australian Securities and Investments commission in order to facilitate testing. Project findings are expected to be released sometime during the first quarter of 2026.
Chainlink, meanwhile, has put itself at the center of a market that could be worth up to $260 trillion. It has done so through partnerships with major financial institutions in order to use its Cross-Chain Interoperability Protocol to really unlock the untokenized assets market. Chainlink partnered earlier this year with Abu Dhabi Glbal Market in order to create blockchain standards while also exploring tokenization frameworks and how they work within a regulated environment.
As a whole, Australia’s approach when it comes to the tokenization of assets is in contrast to the restrictive stances that some of its largest banks have taken when it comes to crypto platforms, in general. The focus of Project Acacia is on regulated institutional applications and could create economic gains of up to AU$19 billion each year. Australia’s real-money settlement testing for third-party platforms is considered by organizers to be a world-first.
Leading the Way in Payments Innovation
Byrne had quite a bit to say on the matter. “Westpac is helping the RBA explore what digital currencies could look like in the real world, while giving our customers access to new payment options safely and securely.”
“We’re delighted to be selected to participate in this project,” Byrne continued. It’s a great example of collaboration across our business, technology and strategy teams and a proud moment driving innovation in financial infrastructure and real-time payments.”
Westpac continues to make focused, strategic investments when it comes to its real-time payments capabilities. The biggest investment is PayTo, which initially launched in 2024 in order to offer payment flexibility to customers while digitizing processes of the company. It is a digital-first alternative to the traditional system of debit payments, enabling real-time payments, and offering greater control and visibility to its customers.
The benefits for Westpac are numerous. Verified authorization, secure storage, rich transaction data, and minimizing costs through reduced administration are just the tip of the iceberg. Currently, PayTo operates on the New Payments Platform. It settles transactions by making use of the banks’ existing exchange settlement accounts with RBA.
Ultimately, the goal of Project Acacia is to unlock new value without reducing value to customers and providing protection to customers.
Futureproofing
Walker noted that the proof of concept used by Westpac is a chance for the company to test post-quantum cryptography and its practicality in financial systems. This encryption advancement uses new algorithms that have been designed to hold up and resist potential future attacks from quantum computers.
Westpac’s proof of concept is expected to be in coming months while also being developed in partnership with Chainlink and Imperium Markets. “This is a real-world opportunity to learn and create something that will be incredibly important in the future, and something we might need to apply at scale,” Walker said.
“It’s a pre-emptive work in many ways because, while it might not be immediately required, it helps us learn, prepares us and gives us confidence and experience and that will be essential in the future,” Walker continued. “Creating the next generation of payments architecture requires the strategic involvement of all the banks, telcos, retailers, and governments working together. Project Acacia is helping demonstrate the willingness of many of those organisations to work together on these challenges, and that together we are building new capabilities.”
An Exciting Time Ahead
As the completion of Project Acacia nears, it is important to focus on its aims. The core aims involve experimenting with a new form of tokenized central bank money. The focus will be issuance specifically on third-party blockchain networks rather than coming directly from the central bank.
RBA Deputy Governor Brad Jones said, “The aim is to examine how innovation in wholesale markets could be enabled by new forms of digital money and supporting infrastructure. The role that tokenized assets markets could play in improving the efficiency and resilience of wholesale payments and settlements, and in enhancing cross-border payments, are areas of particular interest.”
With participant organisations and uses cases having been selected, the project is taking the next important step forward in achieving all of its goals and objectives.
