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Wednesday, February 28, 2024

Crypto ‘regulatory approach isn’t needed now’ — New Zealand central bank

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The New Zealand central bank is ramping up its monitoring of stablecoins and crypto-assets following public submissions but has stopped short of calling for a regulatory approach.

Ian Woolford, the Reserve Bank of New Zealand’s director of money and cash, said in a June 30 statement that the RBNZ agrees that “a regulatory approach isn’t needed right now, but increased vigilance is.”

Accompanying Woolford’s statement was a summary of 50 stakeholder submissions to an earlier RBNZ paper discussing crypto and decentralized finance.

Respondents included the country’s crypto advocacy body BlockchainNZ, tech company Ripple, along with banks such as Westpac and the Bank of New Zealand.

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Woolford said the submissions showed crypto had “significant risks and opportunities” along with “uncertainties” about the sector’s development which gave it the need for extra attention:

“We agree that caution is needed, which also reinforces the need for enhanced data and monitoring to build understanding.”

The RBNZ is seemingly waiting to see how other jurisdictions will regulate crypto before it makes its own moves.

“Global harmonization is crucial to ensure effective regulation,” Woolford said. He added best practices may become clearer as overseas regimes are implemented.

Related: Unfazed by SEC tumult, top banks work to make blockchains interoperable

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A Chainalysis report in 2022 ranked New Zealand 108 out of 146 in its 2022 Global Crypto Adoption Index, just behind Austria and in front of Azerbaijan. 

The index ranks all countries by “grassroots cryptocurrency adoption.” Source: Chainalysis

New Zealand’s current laws consider crypto a form of property. Digital assets are governed by various non-crypto-specific financial, money laundering and tax regulations that generally apply.

“Issues raised by cryptoassets and other innovations do not fall neatly within agency boundaries,” Woolford said.

He added that consumer and investor protections, along with regulatory barriers to entry, do matter if the country wants to create a “reliable and efficient money and payment system.”

Magazine: Unstablecoins: Depegging, bank runs and other risks loom