While other countries are busy looking for ways to regulate cryptocurrencies, New Zealand wouldn’t have any part in it. The Reserve Bank of New Zealand in a statement today Friday 30 June notified citizens of its intention to monitor the industry, but stated that there is no need for any regulatory oversight.
The release of the statement was necessitated by a recent submission to the bank about the risks of private money on the financial system and monetary sovereignty. The bank had also considered input from the submissions of 50 stakeholders on crypto and decentralized finance (DeFi).
“We agree with the balance of submitters that a regulatory approach isn’t needed right now, but increased vigilance is,” Ian Woolford, Director of Money and Cash at the Reserve Bank of New Zealand, said in a statement.
Among stakeholders who submitted inputs are the crypto advocacy group BlockchainNZ, blockchain company Ripple, and banks like Westpac and the Bank of New Zealand. The bank confirmed that the submissions on the opportunities and risks of cryptocurrencies reinforces their views on the industry.
“The submissions reinforce our view that there are significant risks and opportunities from stablecoins and other private money innovations, but also significant uncertainties about how the sector will develop and where the optimal balance will lie. We agree that caution is needed, which also reinforces the need for enhanced data and monitoring to build understanding,” Woolford added.
Reserve Bank of New Zealand Can’t Regulate Crypto
In several countries, the central bank in collaboration with the financial regulators are at the forefront of crypto regulation. In New Zealand, Woodford said the bank does not have the jurisdictional right to regulate the industry for “crypto assets and other innovations.”
However, the New Zealand’s Financial Markets Authority (FMA) has raised concerns on what it describes as ‘volatile and risky’ Bitcoin. The position of the central bank in New Zealand is contrary to that of many countries where crypto regulation is a top priority.
“However, issues such as consumer and investor protection or potential commercial or regulatory barriers to entry do matter for the collective vision we have for a reliable and efficient money and payment system that better meets the evolving needs of New Zealanders,” the statement added.
Regulating the crypto isn’t necessarily bad for the industry, it helps in many ways. Jurisdictions like Hong Kong and the UAE which have drafted regulatory frameworks for crypto have attracted a large number of crypto companies as a result. This means that the industry actually prefers regulation to a lack of clear direction as is the case with the US.
Clearly, New Zealand isn’t in a hurry to delve into the idea of digital currencies. The bank has up to this time not taken a stand on a central bank digital currency either, even when many countries are actively chasing the idea.
It may not be very long from now before the country starts thinking along this line though, as the world is gravitating towards digital life rather quickly.
New Zealand Falls Behind
New Zealand may be known for its Rugby team and beautiful landscapes, but not for crypto. While you may wonder why, it could have something to do with the central bank not showing any interest in the industry, much less regulating it.
However if regulators in the country can take the industry seriously and come up with a good regulatory framework, it will not be long before it starts booming with crypto, since it is a peaceful country with a welcoming culture, two things any business needs to thrive, including crypto.
The country already considers crypto assets as taxable assets though. However unlike other countries, it groups crypto income together and taxes it at the same rate — whether it comes from gains on disposals or cryptocurrency earned.
It however does not put undue pressure on the industry the way countries like the US do, making it a better haven for crypto than the US currently.
